Litchfield Hills, CT Regional Micro-Loan Program

Litchfield Hills, CT, US

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Type: Program

Status: Ongoing

Source File: http://www.torringtonct.org/Public_Documents/TorringtonCT_EcDev/microloan

Description:

Serving income-eligible small businesses in the 11 towns Litchfield Hills Region.

If your business has:

• 5 or fewer employees, including you as owner
• You meet certain annual income limits based on your household size
• Have a need for low interest financing up to $25,000 for a wide variety of uses including equipment purchase, acquisition or business expansion, or working capital.

Or if your business will:

• Create at least one permanent full time job for an income eligible person
• Has a need for low interest financing of up to $25,000 for each job created for a variety of uses including equipment purchase, acquisition, business expansion or working capital.

The Litchfield Hills Regional Micro-Loan Program may be able to help!

What is the purpose of the loan program?
The purpose of the program is to provide affordable and accessible financing to income-eligible applicants within the 11 town Litchfield Hills region in order to diversify the economic base, create and retain jobs (especially for low/moderate income persons), and to encourage and leverage private investment.

The City of Torrington, with the support of the Litchfield Hills Council of Elected Officials, has been designated to manage and coordinate this program and will oversee its day-to-day implementation.

How does my business qualify for a loan? What are the eligibility requirements?
For-profit entities may apply for either of two loan categories if they meet the applicable criteria.

The two program categories are as follows:

1. Businesses with five or fewer employees, at least one of whom is the owner, may borrow up to $25,000. The owner's annual income must be at or below the limits based on household size outlined in Table 1.

2. Any business may apply for financing if it creates at least one permanent full-time job (or equivalent) which is held by a person from a household whose income is at or below the levels outlined in Table 1. Loans under this category cannot exceed $75,000 or $25,000 per job created.

Table 1
Household Size/Maximum Annual Income
1 person/$41,700
2 person/$47,700
3 person/$53,650
4 person/$59,600
5 person/$64,350
6 person/$69,150
7 person/$73,900
8 person/$78,650

What are the loan limits, rates, and terms?
Loans are at a fixed rate of 3%. The minimum loan is $1,000.

The Program shall use prudent financial analysis and underwriting criteria. Loan terms will vary by project and amount of loan but shall, in general, not exceed 20 years for real estate, 10 years for equipment and 5 years for working capital.

The Program may provide direct financing on a primary or subordinate basis, "gap" or companion financing or such other financial mechanism as may be approved by the City.

What can the loan funds be used for?
Eligible uses include acquisition, construction, rehabilitation, purchase/installation of machinery and equipment or working capital. The use of"third-party" labor for construction or rehabilitation requires payment of Davis-Bacon prevailing wage rates..

What are some of the other loan requirements?
While each Application is unique and each request will be reviewed individually, there are certain common requirements as follows:

• The Program requires that each borrower provide such security/collateral as it is necessary for the specific project.
• In all cases, borrowers must provide personal guarantees in addition to any other security.
• The Program also requires that each borrower provide a minimum of 20% of the loan amount requested as cash equity to the project.
• Projects which are solely or primarily refinancing will not be considered.

Where can I get an application or more information?
Application forms and more detailed information are available from the Office of Economic Development, or the Program Administrator.