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BLDC Financing Programs
The Butte Local Development Corporation would like to
assist you in putting together a financial package that fits your needs.
Businesses can take advantage of several financing programs to help them
to create or locate a new business, or retain or expand an existing business
in the area.
Initial loan packaging discussions begin with the BLDC
staff, which works with you to prepare all needed information for loan
applications, assuming that an appropriate package can be put together.
The package is then presented to the Loan Committee, which makes loan
recommendations on all loans. Committee recommendations follow different
routes for final approval, depending upon the program being used. To obtain
more detailed information or assistance, please contact our marketing
director, Andy Zdinak at 406-723-4349.
Anaconda/ARCO Fund
This community revolving loan fund was originally started
in 1981 to help offset the negative economic impact that resulted from
the reduction of mining in Butte at the time. The BLDC has administered
this fund for the local government since that time. This fund is designed
to assist in the creation and or expansion of jobs in Butte. Priority
is given to businesses, which result in the creation of new basic industry,
diversification of the local economy, and expansion of the tax base. Interest
rates and terms of the loan are all determined on a case-by-case basis.
Butte-Silver Bow Council of Commissioners makes final loan approvals following
recommendations from the Loan Committee. The Anaconda/ARCO Fund has a
current value of approximately $450,000. The average loan size is $16,992.
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BLDC's Economic Development Administration
(EDA) Revolving Loan Fund
The BLDC's Revolving Loan Fund program funded by the
US Department of Commerce Economic Development Administration is designed
to assist economically distressed areas in the creation and retention
of jobs. The BLDC receives the original grant, which we in turn loan to
businesses wishing to locate or expand in the Butte-Silver Bow area. We
usually combine EDA loans with other loan funds. Upon repayment of the
initial loans, principal and interest stay in the community for re-lending
and further economic development activity. The objective of the BLDC EDA
revolving loan fund is: to develop and commercialize value added products,
to assist small manufacturing firms to incorporate new production technologies
and develop new and expanding markets, to close the gap for capital deficient
projects, and the assist manufacturing business in the silicon/ semi-conductor
industry. In short, it may be able to help with your needs, assuming job
creation or retention are a result of your business project. Loan recommendations
are made to the BLDC Board by the Loan Committee. BLDC's EDA RLF has a
portfolio value of $3,350,085 and the average loan size is $91,000. Back
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BLDC's Intermediary
Relending Program (IRP) Loan Funds
The purpose of the US Department of
Agriculture Rural Development Intermediary Relending Program (IRP) is
to finance business facilities and community development projects in rural
areas. An original loan is awarded to an intermediary lending entity (such
as the BLDC) and we in turn lend money to qualified businesses. To be
eligible for assistance, loan applicants must be unable to obtain financing
elsewhere at reasonable rates and terms. Loans of up to $150,000 are available
to private or public organizations and other local businesses for the
following purposes: establishment of new businesses or expansion of existing
businesses; creation of employment opportunities or preservation of existing
jobs; community development projects; business construction, conversion,
enlargement, or development; purchase of land, buildings, facilities,
materials, equipment, and machinery; transportation services; feasibility
studies; hotels, motels; and professional fees. Upon repayment of the
original loans, resulting funds are first used by the BLDC to create more
business loans and to pay off the federal loan over 30 years. After that,
repayment funds can be used to cover the operating costs of fund administration.
BLDC collateral is required by the federal government for its IRP loans
to the BLDC. As a consequence, those who borrow this money from the BLDC
must also provide adequate collateral to the BLDC for their loan. Loans
are recommended to the BLDC Board by the Loan Committee. After BLDC Board
approval, they are submitted to USDA Rural Development State offices in
Bozeman for final approval. The BLDC has received five IRP loans for relending,
totaling approximately $3,200,000. The average loan size is $94,500.
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BLDC's CDBG
Loan Fund (Community Development Block Grant)
The federally-funded CDBG program awards funds
to Montana to grant to non-metropolitan communities for lending by the
local government or local development organizations like the BLDC to private
business projects, which will create or retain jobs for low to moderate
income families. Loan repayments are then re-loaned for further economic
development in the area. The CDBG program is probably the most flexible
federal funding available to cities and states and can be used to fund
a wide variety of projects including job creation, business loans, and
entrepreneurial training. A CDBG activity benefits lower-income people
if at least 51% of the resulting full time jobs are either filled by or
"available to" lower-income people. CDBG funds are also available
for customized employee training, for businesses impacted by wildfires,
technical assistance, and business infrastructure. Loans made from this
fund are recommended by our loan committee and final approval is made
by the BLDC Board of Directors. BLDC CDBG loan fund has a portfolio value
of approximately $307,418 and the average loan size is $21,400. Back
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BLDC's
Community Development Financial Institution (CDFI) Fund
The BLDC is designated as a Community Development Financial Institution
(CDFI) by the CDFI Fund of the U.S. Department of Treasury. Since this
designation, CDFI granted the BLDC $248,000 to supplement the BLDC's growing
revolving loan fund program. Under this program, the BLDC works with businesses
and banks to help fund business expansion, retention, recruitment, and
start-ups. The maximum loan size is $150,000.
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Anaconda/ARCO Fund
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EDA
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IRP
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CDBG
|
CDFI |
| BORROWER |
Any business, corporation, public or private organization
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Any business or corporation
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A qualified business or community development
project
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Any qualified business
|
Small
and start-up businesses |
| FUNDING
LIMIT |
No statutory limit - loans range from $3,000
to $300,000, but are generally in the $15,000-$50,000 range
|
$36,000 to $150,000
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Maximum $150,000
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Minimum $36,000
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$5,000
to $35,000 |
| USE
OF FUNDS |
Priority given to the creation of jobs, the building
of new basic industry and new economy industry, and diversifying
the tax base
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Priority given to jobs creation, building new
basic industry, and new economy industry, and diversifying tax
base
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Priority given to jobs creation, building new
basic industry, and new economy industry, and diversifying tax
base
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Priority given to jobs creation, building new
basic industry, and new economy industry, and diversifying tax
base
|
Priority
given to the creation and retention of jobs, building basic industry,
and Historic District preservation |
| INTEREST
RATE |
-
No greater than 4 points above MN Federal Reserve
Discount Rate, no minimum: Recently rates have been 9%. Rate
is generally blended with other lower rate loans
|
-
Min. 4 points below current money center prime
rate quoted in Wall Street Journal, no less than
4%, max 10%, usually 6.0%
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Generally 6%
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Min. 4 points below current money center prime
rate quoted in Wall Street Journal, no less than
4%, max 10%, usually 6.0%
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Generally
6% |
| TERM |
-
Flexible, depending on project and need
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Working capital: 7 yrs;
Equipment: 10 yrs; Real property: 20 yrs
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-
Working Capital: 7 yrs
Equipment: 10 yrs
Real Estate: 10-20 yrs
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Working Capital: 7yrs
Equipment: 10 yrs
Real Estate: 10-20 yrs
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Working
Capital: 3-7 yrs
Equipment: 1-10 yrs
Real Estate: 5-10 yrs |
| COLLATERAL |
Must be provided, amount is determined on a case
by case basis
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Must be provided, amount is determined on a case
by case basis
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-
Must be provided, amount is determined on a
case by case basis
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Must be provided, amount is determined on a case
by case basis
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Adequate
security is required. Maximum loan to value ratio is 90% |
| EQUITY |
Generally 20%
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Generally 20%
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-
Generally 20%
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Generally 20%
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Negotiable,
20% preferred |
| PERSONAL
GUARANTEES |
Yes
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Yes, required form all who own more than 20% of
the corporation
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Yes
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Yes, required form all who own more than 20% of
the corporation
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Yes,
required form all who own more than 20% of the corporation
|
| CREDIT
CRITERIA |
Based on borrower and project
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-
Based on borrower
-
and project
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-
Based on borrower
-
and project
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-
Based on borrower
-
and project
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- Based on borrower
- and project
|
| LEVERAGE |
Typically 1:4, no more than 25% from Anaconda/ARCO
funds
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At least 1:2
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At least 1:1
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At least 1:1
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1:1 |
| TIME |
1-2 weeks for preapplication
1-2 weeks for application; Approximately one month for processing
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1-2 weeks for preapplication
1-2 weeks for application; Approximately one month for processing
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1-2 weeks for preapplication
1-2 weeks for application; Approximately one month for processing
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1-2 weeks for preapplication
1-2 weeks for application; Approximately one month for processing
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1-2
weeks for preapplication
1-2 weeks for application
6-8 weeks overall |
| QUALIFICATIONS |
Must contribute to job creation, expansion, or
retention; Must be located in Butte-Silver Bow
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Must contribute to job creation, expansion, or
retention; Must be located in Butte-Silver Bow
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Must contribute to job creation, expansion, or
retention; Must be located in Butte-Silver Bow
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Must contribute to job creation, expansion, or
retention; Must be located in Butte-Silver Bow
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Must
contribute to job creation, expansion, or retention; Must be located
in Butte-Silver Bow |
| BENEFITS |
Long-term, low- interest, fixed-rate funds; negotiable
deferrals on principal
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Long-term, low- interest, fixed-rate funds; negotiable
deferrals on principal
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Long-term, low- interest, fixed-rate funds; negotiable
deferrals on principal
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Long-term, low- interest, fixed-rate funds; negotiable
deferrals on principal
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Low
fixed rate financing, long term; negotiable deferrals on principal
and interest |
| FEES |
$500 processing fee can come from
proceeds
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1.5% loan origination fee, can come from proceeds
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2% loan origination fee, can come
from proceeds
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1.5% loan origination fee,
can come from
proceeds
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2%
loan origination fee, can come
from proceeds |
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