Revolving Loan Program

A Source of Capital for New And Expanding Businesses

The FIVCO Area Development District's Revolving Loan Fund Program is a locally controlled source of capital used to help finance start-up and expanding businesses whose projects will create full-time 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.

Eligibility Criteria

Industrial, commercial, and service firms located in Boyd, Carter, Elliot, Greenup and Lawrence Counties, 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.

Rates and Terms of an RLF Loan

Interest rates for RLF loans are one point below New York prime rate and are determined on date of loan closing.

Terms for working capital loans are limited to five years, while terms for fixed assets can be extended. By combining the RLF and bank financing, the borrower can realize a lower effective rate.

Eligible Uses of Funds

Proceeds from RLF loans can be used to:

Purchase land and buildings
Construct new or renovate existing structures
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.

Bank Participation

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.

RLF Policies

Projects financed must be within the FIVCO ADD (Boyd, Carter, Elliot, Greenup or Lawrence County)
Projects must create new jobs or have significant impact (job retention) on the ecomonmic growth of an area
FIVCO RLF caps loans at a maximum of $10,000 per job
Loan limit per application is $150,000
FIVCO will not participate in a loan without other financial lender participation
As appropriate and practical, financing will be secured with personal guarantees, morgages, liens, or assignment corights to assets of the applicants
10% owner equity investment is required

Preferred financing structure:

Bank & Owner Investment	51%
RLF	49%
Total Project Cost	100%

Non-refundable application fee of $250.00

Funding for the Revolving Loan Fund Program is provided by the Economic Development Administration and the FIVCO Area Development District. The program is administered locally by the FIVCO Area Development District.

Application Process

Individuals interested in applying for an RLF loan must submit a detailed business proposal that describes the project, outlines the marketing strategy and provides a tocal project cost estimate. Past, present and projected financial statements must be included in the proposal. Additional information may be required.

Loan Application

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