Revolving Loan Fund
Financing Our Future – Revolving Loan Fund
Financing is consistently cited as one of the biggest obstacles for businesses. MVPC created a revolving loan to provide gap financing for small and growing businesses in partnership with the U.S. Economic Development Administration and the Massachusetts Department of Housing and Community Development to provide gap financing.
Merrimack Valley Economic Development Corporation
At the turn of the 20th Century, textile and shoe manufacturers flourished in the Merrimack Valley region, concentrating in Lawrence and Haverhill. When these industrial centers diminished, the communities sought to stimulate the economy and provide financial incentives to small businesses to create job opportunities in the region. MVPC created the Merrimack Valley Economic Development Corporation (MVED) a 501-C-4 not for profit organization to provide business loans throughout the region. Capitalized by a $1,000,000 EDA grant in 1997, MVED has loaned over $2 million and has created or retained over 200 jobs. As a nonprofit community development corporation, MVED can sponsor businesses for various public loans. To date, MVED has arranged for lending to regional businesses from the Massachusetts Growth Capital Corporation for over $2.5 million.
Loan Fund Services
1. Financing
- Gap financing to supplement private financing inadequate to meet a need
- Flexible terms and relaxed underwriting criteria open the window of creative financing opportunities
- Favorable interest rates adequate to achieve positive debt service coverage
2. Identification and coordination of supportive resources, including technical assistance, job training, and business development through the Massachusetts Office of Business Development and other business agencies.
How it Works
Under the Loan Fund Program, MVED provides loans in the range of $25,000 to $100,000, often used as gap financing on a larger project. The MVED portion of the project is typically less than 20 percent.
- Interest Rate: Tied to market rates and fixed for the term
- Loan Term: Up to 10 years
Eligible recipients
Eligible recipients include private, for-profit businesses unable to obtain adequate financing from private sources. For example:
- Young firms with sound business plans, managerial capability, and significant equity investment
- Smaller firms with a credible history and in need of small loans unavailable from traditional sources
- Mature firms reorganizing to improve operations or realize an important market opportunity, such as defense contractors or textile/apparel companies
Eligible Projects
The Process
Must fill out Revolving Loan Application and include the following:
- Brief history and background (business plan for start-up business)
- Statement on the use of funds
- Three-year historical financial statements and/or IRS returns
- Interim financial statement not older than 90 days (can be done in-house)
- Projections (at least one year)
- Personal financial statements for principals with 20% or more ownership
- Appraisals (copy of existing appraisal or tax valuation accepted)
