A Source of Capital for New and Expanding Businesses
The FIVCO Area Development District’s Revolving Loan Fund (RLF) program is a locally controlled source of capital used to help finance start-up and expanding businesses whose projects will create jobs. The RLF is NOT a substitute for conventional lending sources and is intended only to fill the credit gaps in existing local financial markets. As borrowers repay their loans, the payments are returned to the Revolving Loan Fund to make loans to other businesses. In this manner, the fund becomes an ongoing, or revolving, financial tool. The following information is provided as a general overview of the RLF program.
Businesses located in Boyd, Carter, Elliot, Greenup, and Lawrence counties in Kentucky are eligible for RLF financing. Both the business and its owner(s) must be creditworthy and generate sufficient cash flow to repay the debt. Financing will not be extended to firms whose projects relocate jobs from one labor area to another. The proposed project must create new jobs or have a significant impact on job retention in the region.
Rates & Terms of an RLF Loan
Interest rates for RLF loans are determined on date of loan closing. Terms for loans are determined on a case-by-case basis.
Targeted Uses of Funds
Proceeds from RLF loans can be used to:
- Purchase machinery and equipment
- Provide permanent working capital
RLF loans cannot be used to retire or refinance existing debt or to purchase equity in a business.
The RLF was not established to compete with the banking community or to be a lender of last resort. The RLF is designed to “fill the gap” between what a bank can reasonably lend on a project and what the business can provide in equity. The RLF should complement the lending activities of commercial banks.
- Projects financed must be within the FIVCO ADD (Boyd, Carter, Elliott, Greenup, & Lawrence counties)
- Projects must create new jobs or have significant impact (job retention) on the economic growth of an area
- FIVCO RLF caps loans at a maximum of $20,000 per job
- Loan limit per application is $250,000
- FIVCO may not participate in a loan without other financial lender participation
- As appropriate and practical, financing will be secured with personal guarantees, mortgages, liens, or assignment of rights in assets of the applicants
- 10% owner equity investment is required
- Preferred financing structure:
Bank & Owner Investment: 51%
Total Project Cost: 100%
- Non-refundable application fee of $250 ($50 for pre-application and $200 for full application)
Funding for the RLF program is provided by the Economic Development Administration (EDA) and the FIVCO Area Development District. The program is administered locally by the FIVCO ADD.
Individuals interested in applying for an RLF loan must first submit a pre-application. If an applicant appears to be a fit for the RLF program, based on the pre-application, a full application will be requested. A detailed business proposal that describes the project, outlines the marketing strategy, and provides a total project cost estimate will be required as part of the full application. Past, present, and projected financial statements must be included in the proposal. Additional information may be required.
For questions about the Revolving Loan Fund program, please contact Jacob Perkins at email@example.com or 606-929-1366.