The purpose of the fund is to further economic development that involves the creation of new jobs and income, or the retention of existing jobs and income in the City of Hillsboro.
A revolving loan fund (RLF) is a gap financing measure primarily used for development and expansion of small businesses. It is a self-replenishing pool of money, utilizing interest and principal payments on old loans to issue new ones. Often the RLF is a bridge between the amount the borrower can obtain on the private market and the amount needed to start or sustain a business.
The interest rate is slightly below market which makes them very attractive. With flexible terms, the RLF provides access to new financing sources for the borrower, while lowering overall risk for participating institutional lenders. Loan amounts range from small ($5,000 to $30,000) to mid-sized ($30,000 to $100,000).
Eligible uses for RLF loans include:
- Operating capital;
- Acquisition of land and buildings, and fixed equipment;
- New construction including site preparation;
- Payments of assessments for sewer, water, street and other public utilities;
- Building renovation;
- Machinery and equipment;
While the RLF takes on projects with above average risk, borrowers are held to standard financial requirements in loan security. Before a loan is issued, a business or prospective business must supply the following documentation:
- Business plan;
- Business experience and management information;
- Credit history and financial statements;
- Sufficient collateral to repay bank and RLF funding;
- Other personal or corporate guarantees on the project; and
- Cash flow projections.
As a public investment instrument, revolving loan funds are expected to result in public good – namely projects contributing to economic growth and community revitalization. Borrowers therefore, must address performance measures such as:
- Number and type of jobs created or retained;
- Tax-base creation and expansion.
For more information about City of Hillsboro Economic Development Loan Fund and Programs, please contact: City Administrator - (608) 489-2521