C.E.F.S. Economic Opportunity Corporation
Revolving Loan Program
Fact Sheet
PROFILE OF LOAN PROGRAMS
For More Information Contact
C.E.F.S. Economic Opportunity Corporation
1805 South Banker Street
P.O. Box 928
Effingham, IL 62401-0928
Voice: 217/342-2193 - Voice Mail Extensions 121 or 120
E-Mail: cefs@cefseoc.org
Website: www.cefseoc.org
C.E.F.S. Economic Opportunity Corporation
Revolving Loan Program
* ABSTRACT *
C.E.F.S. Economic Opportunity Corporation has as its principal purpose, bringing together resources to stimulate revenue generating businesses that contribute to the economic well being of the low-income community.
C.E.F.S. Economic Opportunity Corporation economic development ventures are characterized by the following:
Economic development activities or projects undertaken by C.E.F.S. Economic Opportunity Corporation, in addition to meeting all other specific federal and state program requirements, must have a directly related low-income client and a small business focus.
The following loan programs are being offered and are described herein:
I
Illinois Small Business Fixed Rate Financing Fund
Type of Assistance In coordination with the Illinois Department of Commerce and Economic Opportunity (IDCEO), business loans are available with 85% of the project covered by a 90% guarantee by the U.S. Small Business Administration (SBA) and 15% of the loan direct
from C.E.F.S. Economic Opportunity Corporation, a Community Action Agency (CAA).
Who Can Apply To be eligible for assistance, the applying business must meet the U.S. Small Business Administration's definition of "small", be for profit, and not dominant in its field. Businesses specifically ineligible include newspapers, speculative businesses, passive investments, and businesses engaged in gambling.
Use of Funds Funds for the program originate from two sources: A local lending institution and C.E.F.S. Economic Opportunity Corporation, a Community Action Agency. The funds from the local lending institution may be used for most business related purposes, including the acquisition of fixed assets and/or working capital. The portion from C.E.F.S. (CAA) cannot be used to refinance existing debt. It also cannot be used to purchase real estate.
Applicable Project Size The smallest possible project is $75,000 with the maximum project size being $600,000.
Terms Most loans through the program will have three (3) different interest rates. Typically, the lending institution will charge one rate for the guaranteed portion of the loan and another rate on the unguaranteed portion. C.E.F.S. Economic Opportunity Corporation (CAA) will charge a third rate on its share of the loan.
Example: $133,336.00 Loan
Local Lending Institution (Guaranteed) $102,002 loaned at 12% (fixed rate)
Local Lending Institution (Unguaranteed) $ 11,334 loaned at Prime plus (floating rate)
C.E.F.S. (Community Action Agency) $ 20,000 loaned at 5% (fixed rate)
The net result is a $133,336 loan at approximately 11-12%.
The maximum maturity for loans through the program is 15 years.
Application Procedure/Evaluative Criteria The interested individual seeking to start a new business or the existing and established business should contact C.E.F.S. or IDCEO to request the application and procedures to apply for a loan.
Two major considerations in reviewing applications are the ability of the borrower to repay the loan and the number of jobs the loan will create. At least 15% of those hired should be classified as "low-income".
Additional Information For additional information on the Illinois Small Business Fixed Rate Financing Fund contact:
Illinois Department of Commerce and Economic Opportunity (IDCEO)
620 East Adams Street
Springfield, IL 62701
Phone: 217/782-7500 TDD: 800/785-6055
or
C.E.F.S. Economic Opportunity Corporation (CAA) at 217/342-2193 extensions 121 or 120
II
C.E.F.S. Economic Opportunity Corporation
Revolving Loan Program
Type of Assistance Small business low interest loans are available to qualified borrowers.
Who Can Apply To be eligible for assistance the applying business must contribute to the economic well being of the low income community.
Use of Funds The low interest loan funds may be used to increase employment opportunity for low income individuals through the:
1. Purchase of equipment.
2. Purchase of inventory.
3. Provisions of working capital.
Applicable Project Size The smallest possible project is $20,000 and the maximum project size depends on annual funds appropriation and availability.
Terms Loans through this program will have a low fixed interest rate for the term of the loan. The interest rate will be 5 percent on loan program funds. There must be a 51% financial participation in the venture by the private sector. At least one full-time or two part-time permanent jobs per $20,000 loaned must be created. The agency may, based on presentation of written verifiable salary data for the jobs to be created under the loan, set the amount loaned per job at 75 percent of the entry salary. The Agency may use any combination of the $20,000 per job provision and the 75 percent entry salary provision in a single loan.
Example: $61,225 Loan
Local Lending Institution $31,225 (Prime Rate +)
C.E.F.S. (Community Action Agency) $30,000 (Fixed Rate at 5%)
Application Procedure\Evaluative Criteria The interested individual seeking to start a new business or the existing and established business should contact C.E.F.S. to request the application and procedures to apply for a loan.
Two major considerations in reviewing loan applications are the ability of the borrower to repay the loan and the number of jobs the loan will create. At least, one full-time job will be created for every $20,000 loaned.
Additional Information For additional information on C.E.F.S. Economic Opportunity Corporation's, Low Interest Revolving Loan Program, please contact:
C.E.F.S. Economic Opportunity Corporation
1805 South Banker Street
Effingham, IL 62401-0928
217/342-2193 extensions 121 or 120
III
C.E.F.S. Economic Opportunity Corporation
MICRO-BUSINESS LOAN PROGRAM
Type of Assistance The Micro-Business Loan Program meets the need of higher risk entrepreneurs. This program is designed to assist entrepreneurs in establishing and expanding business ventures.
Who Can Apply Businesses eligible for Micro-Business Loans may be a proprietorship, partnership or corporation with no more than 5 employees. If proprietors, eligible borrowers must own all business assets; if partners or corporations, eligible borrowers must own more than 50 percent of the business assets.
Use of Funds The Micro-Business Loan funds may be used to purchase machinery, equipment, and inventory, to provide working capital and to purchase or improve real property (Note: D Category Micro-Business Loan Program loans may not be used to purchase or improve real property).
Applicable Project Size Maximum Micro-Business Loan Program lending is $20,000.00.
Terms Micro-Business Loan Program loans will have a low fixed interest rate for the term of the loan. The interest rate may not exceed 5.0 percent and may be adjusted at the discretion of the agency as long as it never exceeds 5.0%. The term of the loan may not exceed ten (10) years. Eligible borrower must agree to create and fill a minimum of one job for a Community Services Block Grant Program eligible client for Micro-Business Loan Program lending. The job creation may include the borrower if he/she is CSBG eligible and will gain full-time employment through the borrowing. Micro-Business loans made with recaptured principal have the option of creating employment for CSBG clients that have a family income of up to 185% of poverty. The required hiring must be completed within the first 12 months of the loan. The business must be located in the Community Action Agency service area and the borrower must demonstrate that they cannot access conventional financing. Owner equity is permissible loan collateral at the discretion of the Agency. The Agency shall make every attempt to fully collateralize the loan.
Application Procedure/Evaluative Criteria The interested individual seeking to start a new business or to expand an existing or established business should contact C.E.F.S. Economic Opportunity Corporation to request an application and the procedures to apply for a loan. The evaluation criteria is attached to the loan application. A Micro-Business Loan Review Committee will review and rate the loan proposal against established criteria. The loan proposal will be review-ed by the Micro-Business Loan Review Committee for programmatic and financial ability. Two major considerations in reviewing loan applications are the ability of the borrower to repay the loan and create employment for a CSBG eligible client.
Additional Information For additional information on C.E.F.S. Economic Opportunity Corporation's, Micro-Business Loan Program, please contact:
C.E.F.S. Economic Opportunity Corporation
217/342-2193 extensions 121 or 120
IV
C.E.F.S. Economic Opportunity Corporation
C.E.F.S. Revolving Loan Program
Illinois Ventures for Community Action
Type of Assistance Small business low interest loans are available to qualified borrowers.
Who Can Apply To be eligible for assistance the applying business must contribute to the economic well being of the low income community.
Use of Funds The low interest loan funds may be used to increase employment opportunity for low income individuals through the:
1. Purchase of equipment.
2. Purchase of inventory.
3. Provisions of working capital.
Applicable Project Size The smallest possible project is $20,000, and the maximum project size depends on the available dollars in IVAC.
Terms Loans through this program will have a low blended interest rate for the term of the loan. C.E.F.S. interest rate will be 5 percent on current loan program funds. C.E.F.S. and IVCA will enter into a participation loan agreement to service the loan. IVCA interest rate on the loan will be 7.5 percent. There must be a 51% financial participation in the venture by the private sector including bank participation. One full-time permanent job per $20,000 loaned must be created. An origination fee will be charged on the IVCA loan funds.
Example: $100,000 Loan
Local Lending Institution $51,000 (Prime Rate +)
IVCA $24,990 (Balloon 7.5%)
C.E.F.S. (Community Action Agency) $24,010 (Fixed Rate at 5%)
Application Procedure/ Evaluative Criteria The interested individual seeking to start a new business or the existing and established business should contact C.E.F.S. to request the application and procedures to apply for a loan.
Two major considerations in reviewing loan applications are the ability of the borrower to repay the loan and the number of jobs the loan will create. At least, one job will be created for every $20,000.
Additional Information Access to additional funds is possible through C.E.F.S. Economic Opportunity Corporation membership in Illinois Ventures for Community Action is consortium of community action agencies who pool resources to increase lending limits.
Illinois Ventures For Community Action
3435 Liberty Drive, Suite C
Springfield, IL 62707
217/522-4553
or
C.E.F.S. Economic Opportunity Corporation at 217/342-2193 extensions 121 or 120