Small Business Loan Program
Ogden City Small Business Loan Program is a federally-funded program. Our primary objectives are to create permanent jobs and retain existing jobs for low- and moderate-income Ogden residents, to provide economic opportunities in Ogden, and stimulate the redevelopment of under-utilized and deteriorated commercial property in Ogden by providing improved access to business loan financing. Loans will be made to the extent funding is budgeted and available, loans will be considered on a first-come, first-served basis.
SMALL BUSINESS LOAN PROGRAM GUIDELINES
I. PRIMARY OBJECTIVES
- Create permanent jobs and retain existing jobs for low and moderate income Ogden residents.
- Provide economic opportunities in Ogden, with special emphasis on the downtown area, by providing improved access to business loan financing.
- Stimulate the redevelopment of under-utilized and deteriorated commercial and industrial property in Ogden.
II. PROCEDURES
Applicants must obtain the Program Guidelines and Application Packet from Ogden City Business Development Division. If needed, Business Development staff may refer prospective applicants to local technical assistance providers for help in completing the application and business plan.
Applicants should secure all necessary equity and private financing available for the project.
If sources of funding fall short or other economic deficiencies exist in the project, the applicant may submit an application package along with a $100 application fee to the Business Development Division.
Business Development staff will analyze the loan application and advise the applicant of any deficiencies to be addressed. Depending on the specific nature of the business, further verifications may be required. The loan is then submitted to the Loan Committee. Approval should take about two weeks after the completed application package and additional verifications are received.
Loan closing will occur after the loan is approved and documents are prepared. Depending on the complexity of the loan package, this should take one to three weeks after loan approval.
III. REQUIREMENTS
The business location must be in Ogden City.
For activities funded through the Federal Community Development Block Grant Program, loans are subject to requirements outlined in 24 CFR Part 570. This includes the payment of prevailing wages for workers on construction projects.
Activities funded through this program must be designed to benefit low- and moderate-income persons. This is usually met by creating or retaining permanent jobs, at least 51 percent of which, on a full time equivalent basis, are either held by or are considered to be available to low/moderate income persons. The requirement may also be met by assisting a microenterprise (a business having five or fewer employees, one or more of who owns the business) where the owner has low/moderate income.
For an activity that creates or retains jobs, the use of RDA funds cannot exceed $35,000 per full-time equivalent job. The actual dollars per job created will be negotiated on each loan.
Business Development Staff will conduct financial underwriting, and will require documentation from the applicant, to assure that 1) project costs are reasonable; 2) new equity and private financing are maximized and fully committed to the project; 3) the project is financially feasible; and 4) that the owner will not receive more than a reasonable return on equity investment. Specifically, the applicant must provide sufficient evidence that the amount of funds requested from the RDA is necessary for the project to succeed. This can be due to a gap in available financing to cover project costs, the rate of return to the investor(s) is too low, or because the project costs related to the site are not competitive with alternative sites.
RDA loan proceeds can be used for a variety of project costs, including real estate acquisition, new construction, rehabilitation, equipment purchases, and working capital. RDA funds cannot, however, be used for the refinancing of existing debt.
The applicant must demonstrate the ability to repay the loan and provide adequate collateral for securing the loan.
IV. LOAN TERMS
The interest rate, term, and amortization for the loan will be structured to allow for a reasonable rate of return to the investor(s) and adequate cash flow to service project debt, with the following stipulations:
Minimum Loan Amount: $5,000
Maximum Loan Amount: $90,000
Interest Rate: Up to 12% annual
Term of Payments: maximum 10 years however subject to length of lease and/or life of improvements secured
Loan to Value Ratio: Up to 100%
Debt to Income Ratio: Up to 50%
Owner's Return on Equity: Varies, based on industry standards for the type of business.
Loan Guarantee: Borrower's new bank loan may be guaranteed according to the above guidelines, in place of a cash loan. The maximum guarantee of a bank loan will be 35% of total bank loan amount, but not to exceed $250,000.
For further information call or write:
Business Information Center
2444 Washington Blvd.
Ogden, UT 84401
(801) 629-8607
OGDEN CITY APPLICATION PACKET
Listed below are the elements we require for a loan package on a small business loan:
- Small Business Loan Application - fully completed
- Current pay stub on all borrowers (including any other reletive living in the home who is employed)
- 3 years tax returns on all borrowers (personal and business if self-employed)
- Current financial statement on business if self-employed
- Current operating statement on business if self-employed
- Business plan
- Copy of all lease agreements on property to be secured
- Insurance coverage/copy of policy
- Cash flow statement on property to be secured
Upon receipt of the loan package, we review the information and present it before our loan committee. This committee makes a determination as to whether or not this is an eligible use of Community Development Block Grant Funds (federal money). Once we have the approval by the loan committee, closings are scheduled 1-3 weeks thereafter, depending on turnaround time of any additional documentation and possible City Council approval.
Loans will be considered on a first-come, first-served basis. Loans will be made to the extent funding is budgeted and available from the agency's annual implementation budget.
For further information, contact Jean Harris at:
2444 Washington Blvd
Ogden UT 84401
(801) 629-8604
E-mail - jeanharris@ci.ogden.ut.us
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