Ste Rose Community Development
Corporation

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Ste. Rose Community Development Corporation
Community Works Loan Program
Loan Policies and Procedures

Objectives of the Loan Program

The objectives of the Ste. Rose Community Development Corporation are:

a)       provide seed capital when other sources are not readily available for new and expanding small and home-based businesses;

b)       assist in implementing new business opportunities identified by the community to meet the strategic community development plans and needs;

c)       enable communities to take a direct role in sustaining their economic future by creating new jobs and diversifying their economies.

Borrowers’ Requirement

Before the Ste. Rose Community Development Corporation becomes involved in providing financial assistance, certain criteria and guidelines must be adhered to:

a)       The borrower is encouraged to inject non credit equity from outside sources;

b)       The business must be a sole proprietorship, partnership or corporation owned by a person(s) over the age of 18 years who is eligible to work in Canada.

c)        The business must be located, and the principal owners reside within, the boundaries of the Ste. Rose Community Development Corporation’s operations. (Rural Municipality of Ste. Rose and the Town of Ste. Rose du Lac)

d)       The business must generate less than $250,000 revenue in the past year or be expected to generate revenues less than $250,000 annually.

e)       The business must be an active, legitimate for profit operation, not engaged in primary production, extraction of or exploration for oil, gas, or minerals, or providing residential real estate services.

f)         The proposed operations of the business should engage in new business areas identified as development priorities by the community.

g)       Loans must be used to purchase capital assets (which may include inventory), or to develop the business (for instance, marketing or research) but not to repay existing debt or equity or to pay for wages or ordinary operating expenses. (Other ineligible uses of the funds include buying real estate, refinancing a business, re-lending, paying dividends, and payments to or debts of a shareholder, owner or former owner).

h)       The business must comply with all planning and development regulations.

i)         If the business is a corporation or partnership, the principal or partners must provide both joint and individual unlimited personal guarantees for the loan also with other securities including a demand promissory note and a General Security Agreement or Specific Security Agreement. (This will be specified in the Ste. Rose Community Development Corporation’s letter of offer)

Loan Eligibility Criteria

No borrower may have more than $10,000 borrowed from the Ste. Rose Community Development Corporation’s Community Works Loans Program at any given time and all borrowers must repay loans by regular installments within five years. The Ste. Rose Community Development Corporation will charge the borrower interest at a rate between the local commercial prime rate and prime plus two percent (2%). The Ste. Rose Community Development Corporation may not forgive any loans, and loans must be called if the business ceases operations.

Loan Interest

Loans will be assessed as either low risk with an interest rate of prime; medium risk with an interest rate of prime plus one percent (1%); of high risk with an interest rate of prime plus two percent (2%).

Application Procedure

The borrower will provide an application form and a business plan/proposal to the Ste. Rose Community Development Corporation. The Ste. Rose Community Development Corporation’s Loans Committee will review the application based on the following assessment guidelines and will make a recommendation to the Ste. Rose Community Development Corporation for approval or refusal.

Assessment Guidelines

The Ste. Rose Community Development Corporation will assess the business and the degree of loan risk by analyzing these five main areas:

CHARACTER

The success of an enterprise depends to a large extent on the caliber of its management, an assessment of both the experience and capabilities of the business’ management personnel is critical. Some key areas to examine in evaluating management are:

-          Training and knowledge; education; understanding of the industry; and communication skills

-          Experience in the same industry and in other industries; sub-management industry experience.

-          Planning; vision and strategic thinking; financial and cash budgeting; human resources planning; business plan experience and expectations; market and marketing; operations; and financial plan.

-          Financial competency; type and availability of financial information; internal financial controls; completeness and accuracy of financial information.

-          Character and integrity; ambition, drive, tenacity, flexibility, and position in the community.

CAPACITY

Capacity addressed the past financial performance of the enterprise, a prime indicator of the future viability of the outfit and the likelihood of loans being repaid in an orderly manner. Some key areas to examine are:

-          past levels of debt coverage

-          projections of future debt coverage levels

-          liquidity past and future

-          Pas and future needs for replacement of fixed assets

-          Outside income

-          Efficiency

-          Profitability

-          Income volatility

COMMITMENT

The commitment of the owner(s) of the enterprise is crucial to its success. In other wods, the owner(s) must have a continued stake of sufficient importance to them that they will support it to the utmost. The traditional areas to assess include:

-          financial commitment; net worth; debt/equity leverage

-          Non financial commitment; nature of the business and its assets; personal commitment.

COLLATERAL

Collateral provides the secondary source of repayment. In order to provide adequate coverage for the loan, the following questions should be addressed:

-          What assets are available?

-          What is the value of these assets, based on condition, location, age and current market?

-          What future priority considerations should exists?

-          Are there other lenders and what security do they hold?

CONDITIONS

To assess the future viability of the enterprise and therefore risk, a number of areas should be explored:

-          legislation; municipal, provincial, and federal, the changes underway and those that may be foreseen in the near future (3 to 5 years)

-          market; current conditions, short and long-term outlooks

-          economy; local and broader outlook

-          environmental impact

-          connection exposure.

Appeal

The only basis for appeal would be new or additional data, appending or amending the original loan application. A request for such an appeal would have to be in written form addressed to the Board of Directors of the Ste. Rose Community Development Corporation.

Terms, Fees and Charges

All other fees and charges relating to the loan, including preparation of business plans, loan application, security documents, legal services and any other fees deemed necessary, shall be the responsibility of the borrower.

Monitoring

The Ste. Rose Community Development Corporation will assist in business progress as deemed appropriate on an ongoing basis. Casual contact may be necessary once completion or submission of annual reports from the business. More intensive monitoring will be established should the business have difficulties in making payment or is defaulting.

Default or Delinquency Management

Delinquent accounts will be addressed with promptly, systematically and consistently. Please see Loan Collection Policy and Procedures.

The main intent of the Ste. Rose Community Development Corporation is to motivate the borrower to meet payments. Personal visits, phone calls, overdue notices, demand for payment, realization on securities, outside collection services and small claims court for losses are steps which could be taken by the Ste. Rose Community Development Corporation.

Ste. Rose Community Development Corporation
COMMUNITY LOANS PROGRAM

APPLICATION FORM

PERSONAL BALANCE SHEET:

Loan Policy

Ø       proposed/existing business should generate less than $250,000 annually and be an active, for-profit operation.

Ø       applicants must be at least eighteen (18) years of age

Ø       maximum loan to a business is $10,000.

Ø       maximum loan repayment period is five (5) years.

Ø       maximum loan interest rate will be prime plus 2%.

Ø       no loan will be forgiven.

Ø       first priority will be given to business applicants who are proposing businesses that will create full-time jobs.

A business plan/proposal and a $25 fee must accompany this application.  A copy of a birth certificate and a current driver’s license is required.  Please read the information sheets before submitting your application. Applications are to be submitted to the Economic Development Office at the Ste. Rose du Lac town office between 8:30 a.m. and 4:30 p.m.

The undersigned do(es) hereby certify that the information on this application is a true statement and acknowledge(s) that the Ste. Rose Community Development Corporation, in granting this loan relies on the accuracy of this statement.

The undersigned hereby authorize(s) the Ste. Rose Community Development Corporation to conduct a personal investigation and the undersigned by signature, accept(s) as notice in writing of, and authorize(s), the obtaining of any information, which the Ste. Rose Community Development Corporation may required at any time in connection with the credit hereby applied for, from any source to which the Ste. Rose Community Development Corporation may apply, and each source is authorized to provide the Ste. Rose Community Development Corporation with such information.

In addition, the undersigned hereby authorize(s) the Ste. Rose Community Development Corporation to disclose at any time in response to direct enquiries from any other lender or credit bureau, any information concerning the undersigned that the Ste. Rose Community Development Corporation considers appropriate, and agree(s) to indemnify the Ste. Rose Community Development Corporation and save it harmless from any and all claims in damages or otherwise arising from any such disclosure made by the Ste. Rose Community Development Corporation.

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