NTRPDC Lending Assistance
NTRPDC is a Certified Development Corporation and an Area Loan Organization. The NTRPDC loan program supports entrepreneurial and small business endeavors that form the backbone of our local economy. We can offer small businesses in our five-county region low-interest loans from our own revolving loan funds as well as assist them to access regional, State and Federal loan programs.
NTRPDC loan programs provide term, fixed-rate financing at interest rates lower than conventional financing. The loan programs are not intended to replace convention financing but rather are intended to fill a gap beyond the amount of private lender participation and owner equity investment. NTRPDC works with local commercial banks and owner investment to further the vitality of the Northern Tier business community. Since inception, our loan programs have distributed over $31 million and leveraged over $128 million.
FREQUENTLY ASKED QUESTIONS
What are eligible uses of loan proceeds? Eligible uses include land acquisition, building costs, machinery and equipment, site preparation, and working capital.
Are there ineligible uses of loan proceeds? Ineligible uses include speculation of real or personal property, related-party transactions, loans used to relocate jobs from one labor market area to another, projects that cannot demonstrate job creation or retention, and projects that start prior to loan approval. Refinancing of existing debt is generally not eligible.
What evaluation criteria do you use? Businesses must be located in our five-county area. The business must be for-profit. The applicant must demonstrate that the proposed project is viable and must demonstrate the ability to repay the loan as well as have adequate collateral and acceptable credit.
What is a typical loan amount? NTRPDC programs range from $25,000 microloans to $100,000 RLF funds. State and regional funds may have higher maximums. The maximum amount an applicant is eligible for will vary depending on the total amount required for the project, the source of the funds and the employment opportunities associated with the project. Public funds typically can finance up to 50% of the eligible project cost.
What are typical interest rates and length of loans? The current interest rate on NTRPDC loan programs is 2.75%. The rate on other sources of public funds varies. Loan terms vary with the requirements of the funding source as well as the use of funds. Fixed assets usually require a five to fifteen year term; working capital a three to five year term.
What are the loan fees? As with any loan, certain fees are required to cover administrative costs. NTRPDC's revolving loan fee is 1% of the loan amount, due after approval at the time the commitment letter is signed and returned. In addition, the borrower is responsible for all legal costs and filing fees, if any.
How must the loan be secured? All loans must generally be secured by appropriate mortgage and lien positions on collateral. Personal guarantees are generally required by all principal owners/shareholders owning over 20% or more of the business. Hazard insurance and key person life insurance policies are usually required.
Will you fund my start-up business? Start-up businesses are more difficult to fund than existing businesses that have a profitable history. Start-ups must provide a comprehensive business plan with financial assumptions and projections in addition to the other application materials.
Can I get 100% financing for my project? You will not be able to start a business without investing some of your own savings and other assets. You will not find a bank willing to lend you 100 percent of what you need or a government program to fund the entirety of your business.
Can I refinance my existing debt? Refinancing of existing debt is not eligible.
Will you retroactively finance my project if I have already started? Our funding source guidelines generally prohibit us from financing projects that have begun prior to loan approval. Be sure to contact us before starting your project.
Are there grants available for my business? Grants typically do not exist in the form of money that is provided directly to a for-profit business without having to be re-paid.
What if I need a line of credit for my business? NTRPDC programs are term loans. Commercial banks offer lines of credit.
What is entailed in the application process and how long does it take? The Local Loan Review Committee (LLRC) meets the second Friday of each month. Applications and all required attachments submitted to NTRPDC by the business will be reviewed by department staff prior to presenting the loan request to the LLRC. We must have the completed application and attachments by the first of the month in order to have time to analyze the application and package it for the committee review. Plan accordingly!
If the LLRC makes a recommendation for approval, the loan application is sent on to the NTRPDC Executive Committee who must vote for final approval of the loan. A commitment letter is then mailed and must be signed and returned along with the commitment fee. The loan closing is then scheduled at a mutually convenient time.
How do I begin the loan process? Determine the scope of your project, what you plan to do and how much it will cost. If you are a start-up business, you should also prepare a comprehensive business plan (assistance can be had from the PA Small Business Development Center in your area). As soon as you have your project outlined, call the loan department at NTRPDC to begin the loan process.
For more information, contact our Loan Program Manager Stacey Urban by email or call 570-265-1510.