Community Works Loan Program & Summary of Most Common Financial Programs

COMMUNITY WORKS LOAN PROGRAM

APPLICATION INFORMATION

Objectives of the Loan Program:
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 Miniota Archie CDC 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 Miniota Archie CDC’s operations. (Rural Municipality of Miniota and Archie)
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.

Loan Eligibility Criteria:
No borrower may have more than $10,000 borrowed from the Miniota Archie CDC’s Community Works Loans Program at any given time and all borrowers must repay loans by regular installments within five years. The Miniota Archie CDC will charge the borrower interest at a rate between the local commercial prime rate and prime plus two percent (2%). The Miniota Archie CDC 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 Miniota Archie CDC. The Miniota Archie CDC’s Loans Committee will review the application based on the following assessment guidelines and will make a recommendation to the Miniota Archie CDC for approval or refusal.

Assessment Guidelines:
The Miniota Archie CDC 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 Miniota Archie CDC.

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 Miniota Archie CDC 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.

You may print off an application by clicking on the link below.

-Works Loan Program-

To have your application reviewed by the CWLP committee please fax it to our office at 567-3807 attention:  Thomasina Charney or mail to our office at:

MACDC   Box 68   Miniota, MB  R0M 1M0

SUMMARY OF THE MORE COMMON  FINANCIAL PROGRAMS

Arranging financing is often one of the challenges of starting or expanding a business. The Miniota Archie Community Development Corporation is one of the very few sources of seed capital for new ventures that have no track record and very little or no equity. There are many loans programs available to businesses within the R.M. of Miniota and Archie through various agencies. The following is a few of the more common programs. For more detailed information contact the MACDC office or visit the Canada/Manitoba Business Service Centre online at www.cbsc.org/manitoba.