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Show Five County Revolving jjj Loan Program A Succesl An 18 month effort on the part of the Five County Association of Governments to assist local businesses busi-nesses has met with resounding success. The Five County Revolving Revolv-ing Loan Fund (RLF) was established estab-lished in July 1987 for the purpose of providing both existing and new area businesses with low cost financing fi-nancing necessary to expand their operations and create new jobs. The RLF was created by using federal grant funds from the Economic Eco-nomic Development Administration and a Community Development Block Grant. The almost $850,000 was set aside to be used in conjunction with local bank financing for business expansion loans. Since the RLF program's inception incep-tion in July 1987, 11 loans have been approved by the Revolving Loan Administration Board. The Board consists of two area businessmen, busi-nessmen, two bankers, two county commissioners and a county attorney. attor-ney. Businesses which have taken advantage ad-vantage of the RLF include Everex Systems in St. George, Smith Pattern Pat-tern and Tooling Company in Kanab, and Troy Hygro Systems in New Castle. "I was impressed with the expertise exper-tise of the Loan Administration Board," said Bill Smith, owner of Smith Pattern and Tooling. "The Board reacted in a timely fashion when growth for our company was necessary and time was short," continued Smith. The average RLF loan size is $70,000, with an average interest rate of 5 percent and term of 7 years. Borrowers are required to treat the RLF funds like other lender financing. fi-nancing. Monthly payments are made to the Five County Association Associa-tion of Governments. Borrowers must also secure their loans with collateral acceptable to the Five County AOG. Loan repayments are placed into the RLF account and are available for lending to other businesses. busi-nesses. An important aspect of the RLF program is cooperation with local lending institutions. The RLF can provide only up to 30 percent of the total financing needs of a borrower with a cap of $100,000. A 10 percent per-cent down payment from the applicant appli-cant is also required. This means that the business owner must obtain ob-tain at least 60 percent of the necessary financing from conventional conven-tional lending sources. The RLF is generally used to "fill the gap" between be-tween available conventional financing fi-nancing and the resources available to the local business. For every dollar of RLF funds loaned to local businesses, over seven dollars of private funds have been injected into approved projects. "The Five County RLF program has been an essential element in making a number of our loan packages pack-ages workable," said Rodger Allen, vice president of Sun Capital Bank in St. George. "The additional funds from the Five County RLF allow the bank to consider applications which otherwise could not meet our lending criteria," conunued Allen. The primary reason for the RLF program is to create or retain full time, permanent private sector jobs. Borrowers have committed to the creation or retention of over 200 jobs in the region. The borrower also agrees to document that at least 51 percent of the jobs created are filled by low or moderate income individuals. The RLF program requires re-quires that at least one job is created for every $10,000 to $15,000 loaned. Presently, the program boasts a $3,700 per job created ratio. ra-tio. In order to use the limited amount of funds available most effectively, ef-fectively, most RLF funds have been loaned to industrial or manufacturing manu-facturing concerns. It has been found that basic manufacturers provide pro-vide the most stable and long term job opportunities to area residents established a policy of considering only from areas which exhibit extreme ex-treme economic distress andahiRh reliance upon service and trade businesses. "This policy discourages reLiil and service applications in wSi ngton and Iron counties," said I Kenneth Sizemore, Direc: Community and Economic D wj opmcnt at the Five County pn "Service and retail applicat:. le other counties are considered ap case-by-case basis. Prospect: na plicants should be aware th chances of approval are noi : The program is much more r tive to manufacturing busine jnj said Sizemore. itii Currently, the balance avi M for lending is about $130,0 sjd That amount is growing ; sin $9,000 per month as loan pa;' sai are made. "We encourage SP' businesses who are in need of ele tional financing to contact us. Sizemore. at |