Financing Programs
City of Kewanee Revolving Loan Fund
Administering Agency: Kewanee Economic Development Corporation, City of Kewanee
Type of Benefits: Financing
Description of Benefits:
The City of Kewanee Revolving Loan Fund is designed to increase capital availability to projects that create/retain jobs in Kewanee by spreading the risk among lenders and by reducing the cost of capital to the borrower. In most instances, financing through the City of Kewanee Revolving Loan Fund “fills the gap” between project costs and conventional financing.
Allowable Use of Benefits:
Funds can be used for fixed assets including land, buildings, machinery, and equipment (including new construction or renovation of facilities) and working capital. Funds cannot be used to refinance existing debts, finance the relocation of a business from one part of the State to another, to finance speculative activities, or for start-ups.
Eligibility:
For profit and not for profit companies located within the municipal boundaries of the City of Kewanee are eligible to apply.
Loan Amount:
Funding is limited to 50% of total project costs and the borrower must provide a minimum of 10% equity into the deal. For every $15,000 borrowed, 1 job must be created or retained. First position on loan collateral is normally required.
Rate:
Interest rate is set at a minimum of 3%.
Term:
Maximum of 7 years. If the amount borrowed is less than $50,000, the term is set at a maximum of 5 years.
Henry County Rural Revolving Loan Fund
Administering Agency: Henry County Rural Revolving Loan Fund
Type of Benefits: Financing
Description of Benefits:
The Henry County Rural Revolving Loan Fund uses capital provided by the U.S. Department of Commerce’s Economic Development Administration for low interest loans to help qualified businesses locate, expand, or remain in Henry County.
Allowable Use of Benefits:
Funds can be used for fixed assets including land, buildings, machinery, and equipment (including new construction or renovation of facilities) and working capital. Funds cannot be used to refinance existing debts or to finance speculative activities.
Eligibility:
For profit companies located in Henry County including manufacturing, service and commercial businesses.
Loan Amount:
Funding is limited to one third of total project costs and the borrower must provide a minimum of 10% equity into the deal. For every $10,000 borrowed, 1 job must be created or retained. Maximum amount of funding for individual projects is $100,000. All loans must be secured by collateral in an amount equal to the face value of the loan and personal guarantees are required by all principal shareholders owning over 20% or more of the business.
Rate:
Interest rate is generally 4 percentage points below the current prime rate. The lowest interest rate that can be charged is 4%.
Term:
Terms are based on use of fund: loans for machinery and equipment generally have 5 to 7 year terms, loans for land and buildings are generally for 10 year terms, and working capital loans cannot exceed 7 year terms.
For more information: Henry County Rural Revolving Loan Fund
SBA 504 Loan Program
Administering Agency: U.S. Small Business Administration; Local Bank Partners
Type of Benefits: Financing
Description of Benefits:
The SBA 504 Loan Program is designed to provide assistance to existing businesses to acquire to renovate real estate or purchase new equipment. Banks normally required a down payment of 20-30% when financing fixed assets and prefer a floating rate or a fixed rate with a very short amortization. With a SBA 504 loan, the down payment may be as low as 10% and the rate may be fixed for 10-20 years.
Allowable Use of Benefits:
The purchase of land, construction of new building, purchase of existing building, renovation of existing building, and the acquisition of new equipment. Funds cannot be used for working capital, debt refinancing, and inventory financing.
Eligibility:
Creditworthy start-ups will be considered but the program is aimed at existing private sector businesses with annual net profit less than $3,000,000 and a net worth less than $8,000,000.
Loan Amount:
Up to 40% of the project to $1,500,000 maximum for SBA portion on regular loans. Up to 40% of the project to $2,000,000 maximum for SBA portion on public policy loans. Up to 40% of the project to $4,000,000 for maximum for SBA portion on small manufacturer loans. Job criteria: 1 job created for every $50,000 provided by SBA for regular loans; 1 job created for every $75,000 provided by SBA for public policy loans; 1 job created for every $100,000 provided by SBA for small manufacturer loans.
Term:
10 years if equipment only; 20 years for real estate.
Rate:
Fixed for term of the loan based on U.S. Treasuries on funding date.
Other requirements:
Personal guarantee of every 20% owner; 50% bank finance; 10% owner’s equity (add 5% for start up business plus 5% for specialized building).
Typical Structure:
Borrower’s Down Payment - 10%
Bank 1st Mortgage - 50%
SBA 2nd Mortgage -504 loan - 40%
For more information: CDC/504 Loan Program
Tax Increment Financing (TIF)
Administering Agency: City of Kewanee
Agency Contact:
Gary Bradley, City of Kewanee Enterprise Zone Administrator
(309) 852-2611, ext. 232
gbradley@cityofkewanee.net
Type of Benefits: Financing/Grants
Description of Benefits:
The TIF program is a local incentive that provides financial assistance to stimulate private investment in designated districts within a community. TIF works by capturing the incremental increase in property value brought about by the improvement of the designated area and reinvesting those revenues back in the area.
Allowable Use of Benefits:
Eligible expenses for TIF funds include land acquisition, site preparation, environmental remediation measures, building rehabilitation and repair, bond financing costs, rehabilitation and remodeling of existing tenant improvements, streets and other public infrastructure improvements, job training, and professional fees related to the redevelopment project.
Eligibility:
Companies located in Kewanee’s designated TIF areas.
Industrial Revenue Bonds (IRB)
Administering Agency: Quad Cities Regional Economic Development Authority
Type of Benefits: Financing
Description of Benefits:
Industrial Revenue Bonds can be used for the purchase of land and construction/renovation of industrial/commercial buildings, the acquisition of an existing building, and for new equipment.
Benefits of this type of financing include:
Long term – maturity of the bonds is flexible and can range from 10 to 30 years.
Low interest rate – rates are generally 2% to 3% below prime rate. The interest rates are discounted to reflect tax exempt status. Rates range well below conventional financing (65% to 85% of market rates).
Flexible terms – interest rates may be fixed or variable and can finance up to 100% of the eligible project costs.
Favorable terms – there is no fixed minimum job creation or capital investment requirements.
Allowable Use of Benefits:
The acquisition of assets such as land, buildings, and equipment or to construct new or renovate existing facilities.
Eligibility:
Manufacturing firms, multi-family affordable housing developments, and 501 c (3) not for profit organizations.
Loan Amount:
Industrial Revenue Bond financing is most effective for projects requiring over $3,000,000 up to a maximum of $10,000,000.
Term:
Up to 25 years for building financing and up to 10 years for equipment financing.
Fees:
A $2,000 non-refundable application fee is due when the application is submitted. An issuance fee of 80 basis points is due at closing. An annual fee of 40 basis points on the declining balance is due on the anniversary date of the bond if allowed under tax laws. Costs of issuance funded from tax exempt private activity bond proceeds are limited to 2.0%. The fees generally cannot exceed more than 1/8th of the yield on the bonds.
For more information: Industrial Revenue Bonds
IL DCEO Participation Loan Program
Administering Agency: Illinois Department of Commerce and Economic Opportunity (IL DCEO).
Type of Benefits: Financing
Description of Benefits:
The IL DCEO Participation Loan Program (PLP) is designed to work through banks and other conventional lending institutions, to provide subordinated financial assistance to small businesses in Illinois. Applicants should apply through their local banks or lending institutions.
Allowable Use of Benefits:
Working capital, funds to purchase land and to construct/renovate a building or buy new equipment. Debt refinancing or contingency funding are not eligible uses for funds.
Eligibility:
Any for-profit small business operating in Illinois which has, fewer than 500 full-time employees is eligible and/or a Minority, Women, or Disabled Individual -owned business (to meet this ownership requirement, 51% of business must be owned by Minority, Women, or Disabled persons and the management and daily operations of the business are controlled by one or more of the Minority, Women, or Disabled persons who own it). Must create or retain jobs or provide for modernization.
Loan Amount:
Up to 25% of the project, not less than $10,000 up to $750,000 maximum.
Rate:
Bank rate
Term:
Matches term of bank loan not to exceed 10 years.
Fees:
2% of subordination fee
For more information: Participation Loan Program (PLP)
Employ Illinois
Administering Agency: Illinois State Treasurer
Type of Benefits: Financing/Interest Rate Reduction
Description of Benefits:
The Illinois State Treasurer’s Office invests millions of dollars annually in low interest loans to businesses by partnering with eligible lenders to offer interest rate reductions to business owners, large and small.
For more information: Employ Illinois
Opportunity Illinois
Administering Agency: Illinois State Treasurer
Type of Benefits: Financing/Interest Rate Reductions
Description of Benefits:
The Illinois State Treasurer’s Office invests millions of dollars annually to consumers and community development agencies by partnering with eligible lenders to offer interest rate reductions to non-profit organizations, financial institutions, hospitals and credit unions. Programs are also available for Illinois residents with disabilities, families of U.S. military personnel who are on active duty, and victims of storm disasters.
For more information: Opportunity Illinois
Cultivate Illinois
Administering Agency: Illinois State Treasurer
Type of Benefits: Financing/Interest Rate Reduction
Description of Benefits:
The Illinois State Treasurer’s Office invests heavily in agriculture operations in Illinois. This includes interest rate reduction/loan programs for annual operating and long term loans and Storm and Drought programs. Cultivate Illinois also offers rate reductions for alternative agriculture operations and for local governments, businesses, and non-profits to pursue green energy projects.
For more information: Cultivate Illinois