KEDFA Summary

KEDFA offers a mortgage loan program to work in conjunction with private financing. The program is designed to allow businesses to obtain the long term financing needed to encourage growth.

Program Guidelines

• Projects financed must be agribusiness, tourism, industrial ventures, or service industry. No retail projects are eligible.
• KEDFA may participate up to 25% of project fixed asset costs, but KEDFA's amount of participation will be based on the number of jobs created. The maximum loan amount is $500,000. The minimum loan amount is $25,000. KEDFA will not lend more than the private lending institution (i.e. bank) toward the fixed assets.
• The project owners must inject a minimum of 10% toward the fixed assets.
• For projects $100,000 and under, KEDFA may participate up to 45% of project fixed asset costs, if enough jobs are created. The minimum loan is $25,000.
• KEDFA financing may be combined with a Community Development Block Grant, however, in no case will the total involvement from both exceed 33% of the project cost.
• KEDFA financing may be combined with CSBDC/SBA 504 financing.
• Projects must create new jobs or have a significant impact on the economic growth of a community.
• Only fixed assets (land, building, and equipment) may be financed.
• No refinancing will be undertaken.
• Term and repayments are based on that of the private lending institution.
• Personal guarantees are required of the company's owners who control at least 20% of the stock of the company.
• The borrower must provide KEDFA proof that the project is underway (invoices, etc.) within 4 months of the approval date, or the commitment will expire.
• KEDFA funds are not disbursed until the entire project, as outlined in the application, is complete.

Interest Rates and Fees:

• The interest rate is fixed, and is tied to the term of the loan. Rates are as follows:

• A $500 non-refundable application fee must be submitted with the application.
• A 1% commitment fee (minimum of $1,000) is due within one month of the date the loan is approved.

Loan Process

• Applicant should contact his bank to discuss funding for the project.
• KEDFA is contacted to discuss project eligibility, proposed financing structure, and collateral requirements.
• If project is eligible, an application must be submitted to KEDFA for staff review and preliminary approval.
• KEDFA reviews staff recommended loans and makes final decisions at its monthly meeting.

For further information or assistance, please contact:

Don Goodin
Kentucky Cabinet for Economic Development
Department of Financial Incentives
Old Capitol Annex
300 West Broadway
Frankfort, KY 40601
Phone: (502) 564-4554 ext. 3413
Fax: (502) 564-7697
Email: don.goodin@ky.gov

7/2005