Revolving Loan Fund

Revolving Loan Fund

OVERVIEW

The Revolving Loan Fund (RLF) is a permanent loan program administered by the Town of Gorham, providing direct loans to Gorham businesses.  These loans help address financing needs that aren’t met through conventional sources of financing from banks and other financial institutions.  The purpose of the fund is to provide financing to businesses that create taxable assessed value and increase the economic opportunity for citizens in the Town of Gorham, and for initiatives that create or retain jobs.  A Revolving Loan Fund Committee was created by the Gorham Town Council to review all loan applications and make major loan modifications, and oversee loan foreclosure actions.  The RLF Committee is also responsible for making recommendations to the RLF Loan Policy within the established guidelines.

DETAILS

The RLF offers business loans up to $150,000 with interest rates no more than 4 percentage points above or below the posted WSJ Prime Rate.  Interest rates are fixed and reviewed on a quarterly basis by the RLF committee to ensure rates remain competitive and in line with market conditions.  Loans are available for up to 20 years for land and building purchase, and between 3 and 10 years for other business purposes.  The term of a loan is typically matched with the expected life of the asset being acquired through the use of revolving loan funds.

The fund is available to businesses located in Gorham with less than 50 employees or sales of less than $5 million in the most recently reported year.  All applicants must complete the RLF loan application (see below) and authorize the use of a credit score report to determine eligibility and pricing.  Additional documents may be required, as necessary.

Loans are administered based on the below criteria:

  • “Fast Track” loans for $25,000 or less are considered small-amount (“Fast Track”) loans, which undergo an expedited review and approval process by the RLF committee chair and Town staff.   Decisions on fast-track loan applications are generally made within 3-5 business days after receipt of all necessary documentation.
  • “Leveraged” loans are considered to be any loan greater than $25,000 and, per the RLF Guidelines must undergo a review by the full RLF committee before approval.  Typically, decisions on these loans are made within 7-10 business days after receipt of all necessary documentation.  As RLF financing is intended to fill gaps that exist because of lack of access to other sources of financing, eligible businesses must be unable to meet their entire financing needs from conventional financing and their own sources. In order to qualify for financing, 20% of a project’s total financing needs to be provided by sources other than the Town of Gorham RLF. For loan requests of $25,000 or less there shall be no leveraging requirement.
  • Interest-free Signage Loans up to $5,000 are available for the sole purpose of purchasing new or upgrading existing physical signage of a Gorham business. Loan applications follow the fast-track review process and require a personal guarantee of repayment as security for a loan.

All loans require a personal guaranty as a commitment to repaying the full amount of the loan and borrowers agree to pay a 3% processing fee and the Town’s administration of the loan. In addition, all costs for legal documentation and loan closing associated with this loan shall be borne by the borrower.

ELIGIBILITY

  • The Revolving Loan Fund is available to any legal association, corporation, partnership, proprietorship, trust, or individual operating within the legal boundaries of the Town of Gorham.
  • Loans are eligible for the purchase of land, buildings, machinery and equipment, furniture and fixtures, or leasehold improvements.
  • Working capital loans are available for the purchase of inventory, the financing of receivables or other business operating needs.

PRICING & TERMS

“Fast-Track” Loans (up to $25,000)
CREDIT SCORE MAXIMUM AMOUNT INTEREST RATE (FIXED)
625 – 674 $25,000 3.5%
675 – 724 $25,000 3.0%
725 and above $25,000 2.5%
Leveraged Loans (above $25,000)
CREDIT SCORE MAXIMUM AMOUNT INTEREST RATE (FIXED)
625 – 674 $75,000 3.5%
675 – 724 $120,000 3.0%
725 and above $150,000 2.5%

* Effective October 7, 2020, all loans awarded to businesses through June 30, 2021, qualify for a six-month payment deferral option with interest applied according to the terms of the award.

HOW TO APPLY

  • Anyone interested in applying for revolving loan funds should first complete the pre-application form (see below), including your contact information, business name and the estimated loan amount you are seeking.
  • A member of the RLF team will contact you within 1-2 business days to discuss your business needs and begin the application process.
  • Applicants must download and complete the RLF Application Form in its entirety, and send to Kevin Jensen, Economic Development Director for the Town of Gorham, by email (kjensen@gorham.me.us) or hard copy.

Hard copy versions should be mailed to the following address:

Town of Gorham
Department of Community Development
c/o Kevin Jensen
75 South Street, Suite 100
Gorham, ME 04038

COSTS & FEES

All loans include a processing fee equal to approximately 3% of the total loan amount, which is the responsibility of the borrower to pay at the time of closing.  This fee covers all administrative costs incurred by the Town for issuing the loan.

Additionally, all costs for legal documentation and loan closing associated with this loan shall be borne by the borrower, which is approximately 3% of the total loan amount.

PRE-APPLICATION FORM

If you are interested in applying for a Revolving Loan with the Town of Gorham, please complete the below information and click SUBMIT. A Revolving Loan Fund team member will contact you within 1-2 business days. Thank you.

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