Economic Development Revolving Loan Program
 

Financial Assistance for Small Businesses is available through an economic
development loan fund if your for-profit business is located in the Winston-Salem Neighborhood Revitalization Strategy Area (Map) or in the Hewitt Business Center in Old Salem, (336) 777-3600. One example is "Sweet Potatoes A Restaurant", above.  The owners of this business received an Economic Development Revolving Loan from the city to help get them established. 

Your business must help create or retain jobs that benefit low-to moderate-income individuals. These funds are available to businesses unable to secure financing from conventional lending sources.  The program is designed as a matching program to complement investor equity and bank financing. Our average loan is $35,000.  This is a loan program and grant funds are not available. 

The city's Development Office and a seven-member citizen loan review committee appointed by the City Council are responsible for administration of the loan fund. The loan committee consists of individuals representing banking, legal, small and general businesses, community and economic development interests.

ELIGIBILITY

• Small businesses located in the Neighborhood Revitalization Strategy Area (Map) in the Hewitt Business Center at Old Salem. Winston-Salem subcontractors doing business in these areas are also eligible.
• The business' net worth cannot exceed $6 million and net profit after taxes must average less than $2 million during the previous two years.
• You must be willing to contract for free management and technical assistance if determined to be necessary by the loan committee.

LOAN USAGE

A LOAN FOR STARTING A BUSINESS CAN BE USED FOR: 

• Buying property for a business which creates or retains jobs
• Purchasing, constructing or rehabilitating commercial buildings and structures
• Purchasing equipment and fixtures for the business 
• Improving energy conservation
• Business start up costs

A LOAN CANNOT BE USED FOR

• Purchasing, constructing, or rehabilitating government facilities
• Schools and educational facilities
• Facilities used for exhibitions, spectator events, or cultural events
• Hospitals; nursing homes; or other health care facilities
• Purchasing equipment for one's personal use
• Real estate investment
• Constructing or rehabilitation for housing

LOAN AMOUNT/TERMS 

• The minimum city loan is $10,000. 
• All loans are subject to availability of funds.
• The average loan is $35,000.
• The city budget for this year for this program is approximately $150,000.

INTEREST RATE AND FEES

• A simple interest rate of 7 percent per annum is applied. 
• The maximum term of the loan is ten (10) years or 120 months of equal installments. 
• The city may consider a longer amortization schedule with a five (5) call year provision.

COLLATERAL (Property accepted as security for a loan.) All loans are secured through collateral. Preference is 75 percent loan to value ratio ($75 loaned to $100 of collateral); however, loans could be based on loan to value ratio of 100 percent. 

• Acceptable forms of collateral are required and based on commonly-accepted definitions. 
• The city may be willing to accept a second mortgage position in projects where a private lender is involved.

You will be responsible for obtaining an attorney to assist in securing the city's lien on the collateral.

LOAN REPAYMENT 

• Loan payments are due on the first day of the month. 
• A late payment will be assessed at 4 percent of the payment amount after the loan becomes 15 days overdue. 
• If the loan payment becomes 30 days overdue, the city will implement procedures for the collection of delinquent loans. 
• Loans may be prepaid without penalty.

CREDIT HISTORY 

Preference is given to borrowers with a good credit rating; however, the city will consider applicants with credit ratings showing a history of accounts up to 30 days past due. 

Applicants with bankruptcy or repossessions listed on a credit report will, in most cases, be considered too great a credit risk for the program.

JOB CREATION 

• One (1) job must be created or retained for each $35,000 borrowed.
• The business must make a good faith effort, within established guidelines, to make at least 51% of the jobs (created or retained) available to low- to moderate-income people.

SUBMISSION PROCESS 

You should call the Development Office to request an appointment to discuss the loan process. City staff will review with you the guidelines established for the program, your business plan and the supporting items needed for loan processing.  Free assistance in completing the the business plan process is available at: 

• The Small Business & Technology Development Center, Winston-Salem State University, PO Box 19483, Winston-Salem, NC 27110, (336) 750-2030 or 
• The Small Business Center, Forsyth Technical Community College, 2100 Silas Creek Parkway, Winston-Salem, NC 27103 (336) 631-1327. Please call to schedule an appointment.

Submissions

Be sure to include the entire package of items to be reviewed. (See items listing at end of document.) Incomplete packages cannot be processed.


Loan package review. 

The Development Office staff will review your business plan and tax
returns, analyze your financial statements and business performance to determine if you have sufficient cash flow to meet the loan's obligations. The staff will then prepare a summary of your loan request and send it along with the full loan package to the members of the Economic Development Revolving Loan Committee. (All Information submitted to the Development Office is public information.) Completed loan packages received two weeks prior to the loan committee's meeting will be placed on the next agenda. The loan committee considers loan requests once a month. (Schedule available through the Development Office.)

Loan approved or denied. 

The loan committee will make the loan decision based on the information provided. You may be requested to be present during the committee's meeting. The Development Office staff will inform you in writing of the loan committee's decision.

Terms and conditions apply. 

At its discretion, the loan committee may impose additional terms and conditions necessary to strengthen the loan or to secure the city's financial interest.

Distributed funds. 

Once approved, loan funds are distributed on a reimbursable basis or via valid invoice.

Appeal of loan denials. 

You have the right to request an appeal of the loan committee´s decision before the Mayor and the City Council. To do so, you must submit a written request for appeal to the Development Office. The Finance Committee of the Winston-Salem City Council may, at its discretion, formally consider such a request.

COMPLIANCE WITH REGULATIONS
 
Loans made from this program must be consistent and in accordance with the Federal Community Development Statutes (24 CFR 570); the N.C. General Statutes dealing with community development (G.S. 160-A-456, 1983 Sessions Laws); and the policies established by the Winston-Salem City Council. 

Construction companies working on projects funded through this program are required to comply with the Davis Bacon Fair Wage Act.


ITEMS REQUIRED FOR LOAN PROCESSING

All of the following items must be submitted. Incomplete packages will not be considered. 

Preliminary Application obtained from the Development Office. 

Business plan consisting of a narrative explaining:

• Your company; why it was formed.
• History and description of industry.  
• Competition; what makes you different.  
• Market study and strategy.  

Financial Statements: 
Month-to-month cash flow projections for three (3) years or 36 months.
Projected balance sheet and profit and loss statements for three (3) years
Justification of line item assumptions; what is the basis for your line item sales
figures and your line item expense figures?

Statement of Purpose for the loan proceeds including itemized use of funds
Written estimates of building renovations, equipment, inventory and purchases
must be included if applicable.

Statement of Equity; how much funds will you be putting into the business? 

Other Documents:

1. Current Financial Statements of business (income statement and balance sheet) for existing businesses. List of start-up costs for new businesses including written  estimates of all estimated purchases. 
2. Tax Returns for past three (3) years (personal and business). 
3. Personal Financial Statement for each owner owning at least 20% interest. 
4. Personal Credit Report for each responsible owner with at least 20% interest.  
5. Resumes of owner/operators and other key people. 
6. List of Current Obligations (business and personal). 
7. Business References 
8. Collateral offered to secure loan. 
9. Documentation indicating you attempted to obtain funds from a financial institution. 
10. Documentation of Jobs Created: List, by job title, of jobs to be created or retained and indicate jobs which will be made available to low to moderate income persons, whether a job is full-time or part-time; and which jobs require special skills or education. 

Description of actions to be taken by the loan applicant which ensures low to moderate income persons receive first consideration for the designated jobs. A description of the hiring process must be provided. Retained jobs must be made available to low to moderate income persons within two (2) years through turnover. 

If your loan request is approved, you may be required to register with the Workforce
Development Department, Northwest Piedmont Council of Governments to identify
qualified job candidates. 

Northwest Piedmont Job Consortium 
Workforce Development Board 
400 West Fourth Street, Suite 400
Winston-Salem, NC 27101
(336) 761-2111

For more information, please contact the Development Office (336) 747-7474.