The City of Eau Claire Economic Development Administration (EDA) Revolving Loan Program is a public financial initiative designed to support commercial and industrial businesses to promote expanded job opportunities at higher wage levels. By offering larger loans, the program encourages businesses to create jobs within the City of Eau Claire while boosting small business start-up and development, creating new tax base within the City, diversifying the economic base of the region, and fostering business and economy growth.
Flexible Loan Amounts
Businesses can apply for loans ranging from $10,000 to $150,000, making capital attainable to more companies.
Tailored Repayment Periods
Loan terms range between 3-10 years tailored to the use of funds, allowing businesses to play for repayment.
New Job Creation
Loan uses target at least one new job for every $35,000, encouraging new employment opportunities.
Fixed Interest Rate
Loans are offered at a 4% fixed annual rate or 75% of the prime rate, providing predictable and manageable repayment terms.
Diverse Use of Funds
Loans are eligible for uses from some working capital to building rehab, offering flexibility to meet various business needs.
Economic Diversification
The program supports a wide variety of business sectors, enhancing the city’s economic base.
Loan Amounts
The minimum loan will be $10,000 and the maximum will be $150,000. The RLF will target at least one job created or retained for each $35,000 that is loaned. Benefit-eligible positions are encouraged but not required. Created jobs must be full-time and paying at least $15 per hour. Applicants are required to provide a letter demonstrating the bank cannot successfully invest in the project without the RLF. Overall, the RLF will maintain 2:1 leverage at all times.
Interest Rate
The fixed annual interest rate shall not be less than the lower of 4% or 75% of the prime rate listed in the Wall Street Journal. Direct loans may charge higher per the risk.
Terms
The terms of the loan will vary depending on the collateral and use of funds. Short terms will be encouraged. Typical loan terms are 10 years for real estate purchases or renovations, 3-10 years for capital equipment, or 3 years for working capital. If it is determined by the Loan Administration Board that deferral of the principal payment for a period not to exceed 18 months would likely lead to the success of the project, deferral may be allowed as approved by the Board. Other loan payment deferrals will be considered on a case-by-case basis.
Collateral
The City will record a lien against the collateral pledged for the loan. Fixed asset loans will be collateralized with the assets purchased. Working capital loans can be collateralized with inventory, fixtures, receivables, or anything else the Board deems necessary. A maximum loan-to-value ratio is 1.00. To create flexibility within the program, a 1.00 loan-to-value ratio is not required for collateral, but applicants much pledge available collateral to a project. Personal guarantees will be required for all owners with greater than a 20% stake in the business.
The City’s Economic Development staff will review the applicant’s materials to ensure accuracy and completeness. They will then bring the application forward to the City’s Loan Administration Board, who will review the entirety of the application and approve or deny the loan request.
Eligible Borrowers
Any manufacturing, commercial, service, and creative economy businesses (inluding restaurants) located within the Eau Claire city limits and those targeted businesses of the City. Industries targeted for growth include medical devices, nano-technology, software development, food production, plastic manufacturing, and computer components. There is also a focus on attracting development of innovation- and knowledge-based technology clusters, as well as creative entrepreneurial activity. Priority will be given to business retention and expansion projects.
Eligible Uses of Funds
Purchase of capital equipment, purchase of a facility, new construction, rehabilitation, reuse, and renovation of buildings, and working capital.
Ineligible Uses of Funds
Refinancing existing debt. However, upon Board approval, RLF borrowers may move the loan to a different financial institution if the City’s lien position will not be compromised. Subsidizing interest payments on an existing RLF loan. Equity position acquisitions or the borrower’s equity contributions on other federal agencies’ loan programs. Investing in interest-bearing accounts or unrelated investments. Relocation of companies located outside the City of Eau Claire.
Follow these steps to apply for the financing options offered by the City of Eau Claire.
Determine Eligibility
To begin the application process, reach out to our division via email or phone call. Our team will help you review the guidelines for each loan program to find the right financing option for your business and will make recommendations depending on factors such as your income, collateral, business type, and intended use of the loan funds.
Complete an Application
When a loan program has been selected, our team will provide the application and next steps. Carefully fill out all sections of the form, gather all necessary documentation listed on the checklist included in the application, and submit all of your materials via email or in person. We will then review all of the materials you provided to ensure they’re complete.
Present to the Loan Board
Once your application is ready, we will invite you to present before the Loan Board. At this meeting, board members will review your application and ask questions so they understand the intended use of the loan funds. They will then deliberate and deliver a decision by the end of the meeting or request more time.
Sign Loan Documents
If your loan is approved, the Finance Department will extend a final offer outlining the interest rate, terms, and conditions of the agreement. Read these documents carefully and ask any questions you have before signing. Then sign and return them to the Finance Department.
Receive Funds
Once the loan documents have been signed, you will receive the loan funds as outlined in the agreement, usually within 1-2 months. Be sure to only use the funds for their intended purpose and adhere to the repayment schedule so you can maintain a positive credit history and avoid any potential penalties or fees.
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