REAP Direct - Revolving Loan Fund (RD-RLF) Program Outline

Direct loans are available for working capital, inventory, supplies, furniture, fixtures, machinery, and/or equipment. Proceeds can be used for a startup or expansion business. In no case shall the proceeds of this loan fund be used for down payment purposes or for the purchase of real estate.

Recommended levels of participation:

Levels of participation are recommended, but will not be the final determinant of approval/denial. (If, for example, there is no available bank participation, then the RD-RLF can become the Senior Lender, the REAP Peer Model becomes the Secondary Lender, and Owners Equity is third.) Percentages represented above are maximum amounts for the Senior Lender and RD-RLF and Owner’s Equity.

Loan Specifics

• Term of Loan: Equivalent to the useful life of the asset purchased to a maximum term of six years.
   

• Rate: Prime plus 4.00% or SBA maximum limit (whichever is lower).
   

• Loan Levels: Maximum $25,000.
   

• Job Creation: Each project shall create/retain one full-time equivalent (FTE) per $25,000 of RD-RLF loan funds.
   

• Loan/TA Fee: Fee is $100/loan for loans from $5,001-$25,000. Fee is $50/loan for loans $5,000 and below. (Note: REAP peer or individual membership must be maintained over the life of the loan.)
   

• Other Fees: Borrower is responsible for all fees in cases where real estate is used as security for the loan. Borrower is responsible for fees relating to title and lien searches. The amount required can be made part of the loan or paid directly to REAP from the borrower.
   

• Eligibility: Any for-profit entity (individual, firm, partnership, or corporation) legally doing business within the state of Nebraska. Non-profit childcare centers are eligible to borrow under this program, but no other type of non-profit business is eligible.
   

• Exceptions:

1. Production agriculture products through growing, cultivating, and harvesting either directly or through horizontally integrated livestock operations except for commercial nurseries or timber operations.

2. Development of a proposal that may result in the transfer of jobs or business activities from one area to another. This provision does not prohibit establishment of a new branch or subsidiary.

3. Development of a proposal which may result in an increase of goods, materials, commodities, services, or facilities in an area where there is not sufficient demand.

4. Projects not owned or controlled at least 51% by U.S. citizens or persons legally admitted for permanent residence.

Application Review Process for Direct Loans from $5,001-$25,000

There is a four-step approval process:

1. Pre-application form submitted to REAP Pre-application review committee. The review committee will be made up of the REAP Business Specialist, REAP Senior Business Specialist, and the REAP Program Director. A unanimous vote of all three committee members is required for the loan to move to Step 2.

2. If approved by the Pre-application review committee, the borrower will then issue their guarantee check and will complete a full application in conjunction with the REAP Business Specialist. The full application will include:

• REAP Business Plan or equivalent to include:

  • Previous three years’ Balance Sheets and Profit and Loss Statements.

  • Current Balance Sheet and Profit and Loss Statement.

  • Resumes of principals with ownership of 5% and over.

  • Documentation for the items of expansion (i.e. construction estimates, equipment quotes).

  • Projections for the next year (monthly) and the following two years (annual), including all assumptions.

  • All Business Plan components (i.e. marketing plan, management structure, financial analysis, customer service, goal setting, etc.).
    
    * Start-ups will be pro forma as opposed to historical.
     

• RD-RLF Application form.

• List of collateral available for security.

• Environmental Checklist.

3. Full application is submitted to the Loan Review Committee for approval/denial. This committee will consist of the REAP Business Specialist, REAP Senior Business Specialist, REAP Program Director, and four area REAP Loan Review Committee representatives. A quorum will consist of at least two REAP staff and at least two area REAP representatives. The vote must be unanimous to allow the loan to proceed to step 4.

Approval Criteria: Once the required full application has been submitted, the Loan Review Committee will analyze the application within the following criteria.

A. Who are the principals, do they have the necessary experience to operate the business?

B. Is the collateral sufficient to adequately secure the loan?

C. How much equity do the principals intend on using in the project; are they committed?

D. Is there adequate cash flow, either existing or projected, to service the debt, are the assumptions to the projections solid enough to support their projected cash flow?

4. Upon completion of final review, all loan documents will be executed with the proper security and loan conditions.

For Direct Loans of $5,000 and Below, NOTE THESE INSTRUCTIONS

Direct Loans $5,000 and below (called the REAP Rapid Loan) do not utilize the Pre-application process as described above under item 1. The $5,000 and below borrower begins at item 2 listed above and completes the REAP Rapid Loan Application.

The Loan Review Committee for the $5,000 and below Direct Loans will consist of the REAP Business Specialist, REAP Senior Business Specialist, and the REAP Program Director. A quorum will consist of three REAP staff. The vote must be unanimous to allow the loan to proceed to step 4.

Loan Disbursement

Upon final execution of all loan documents and when all security and loan conditions have been met, REAP staff will issue a loan check. It will be sent, along with the borrower’s copies of loan documents, to the borrower within seven business days.

For more information: contact Jeff Reynolds, REAP Program Director, 402.656.3091,  jeffr@alltel.net or Peggy Mahaney, 402.687.2103 x 1012 or peggym@cfra.org