Economic Development
Revolving Loan Program
Program Objective
The City of Saratoga Springs established the "Economic Development Revolving Loan Program"
(hereinafter, the Loan Program) to stimulate job creation for low- and moderate-income (LMI)
residents. The Loan Program would, in effect, help to subsidize job opportunities by offering low interest loans and/or loan guarantees to businesses physically locating within the City of Saratoga Springs. The goal of the Loan Program is to create at least one job for every $25,000 loaned.
The Loan Program, originally funded by a U.S. Department of Housing and Urban Development
(HUD) grant, is administered locally by the City's Office of Community Development (OCD) and
all applicants are bound by federal program requirements. The total loan pool is approximately
$150,000 with $60,000 currently available for immediate release. The City's intent is to make
loans of approximately $30,000 - $50,000 to eligible businesses to promote job creation for LMI
residents. New loans will then be issued as funds become available from repayment of prior loans.
Application Reguirements
- A successful loan applicant must be a business that is physically located within the city limits of Saratoga Springs.
- A successful loan applicant must have all real estate taxes and special assessments on all
identified real property in the loan application, residential and commercial, paid in full prior to the submission of any loan application.
- A successful loan applicant must create new employment for LMI persons according to HUD
guidelines. These employment positions should be available to persons with no more than a
high school education and should not require previously acquired skills or training.
- Eligible businesses include manufacturing, warehousing and wholesaling enterprises. Retail
trade, finance, insurance and real estate businesses are not eligible to apply. Potential applicants from service-oriented businesses will be evaluated on a case by case basis. The City may make exceptions to these exclusions for loans to fund on or off-site infrastructure improvements on a case by case basis.
- The maximum loan from this fund to any one applicant will be $50,000. Exceptions to this
guideline will be made only in the most unusual of circumstances. Interest rates will be
negotiated on a case by case basis but will carry a minimum charge of 3%.
- Fixed asset loans may be approved for up to 100% of the costs for land acquisition, building
construction or rehabilitation, capital equipment, and attendant soft costs (e.g., legal,
accounting, design fees, surveys, etc.).
- Direct loans for working capital may be approved to cover documented working capital
requirements of any business eligible for assistance.
- Adequate security is a fundamental criteria for all loan applications. Fixed assets and/or
working capital loan facilities will be secured with the most senior lien position available on
land, buildings, capital equipment, inventory, accounts receivable, and other business assets.
Personal guarantees from the principals of the project company will also be a mandatory
requirement for all loan applications.
Pre-application Procedures
The Saratoga Economic Development Corporation (SEDC) is under contract with the City to
develop and review formal loan applications with local businesses and to make recommendations
to the Saratoga Springs City Council regarding loan approval or disapproval.
Loan applicants must submit a pre-application letter indicating their interest, a nonrefundable $200 application fee, and the following documentation (if applicable) to Saratoga Economic Development Corporation:
- A description of the total project cost from start-up to completion and operating costs of any new or renovated facility. Costs should be broken down into equipment, working capital,
construction, etc.
- Commitment letters or explanation of other financing sources for total project costs.
- Description of current status of ownership demonstrating site control. Status of site plan
approvals needed from local boards.
- Implementation and construction schedule from start-up through completion and operation.
- Number and type of jobs to be created by initial project over the next five years and
identification of the number or percentage of jobs that would be held by, or made available to,
LMI persons. This percentage must be equal to, or greater than, 51% of the new jobs. The
applicant must provide job descriptions, information on job training programs and the intended
hiring process and description of actions which will be taken to give LMI persons first priority
in filling jobs, and any other information required by OCD.
- Dollar value and brief description of contracts already committed for production and a five
year projection of contracts expected.
- Description of products to be assembled/manufactured or services to be provided.
- An indication of how this loan would be utilized as part of the total project costs (e.g.
equipment purchase, working capital, construction). All information provided with the loan
applications will be maintained in a strictly confidential manner. SEDC staff will work with the
applicant to insure that program objectives are being met and that the pre-application is
complete.
Application Loan Review & Decision Process
1. SEDC staff will evaluate loan applications and make recommendations to its Advisory Loan
Review Committee.
2. The Advisory Loan Review Committee will assess loan applications based on the following
criteria:
- Credit worthiness
- Project feasibility
- Adherence to federal program requirements
- Job creation potential
- Eligible use of loan funds
- Adequate loan security
- Proof of financial commitment
The Office Community Development will provide the Advisory Loan Review Committee with an
assessment of the application's adherence to federal program requirements and eligible use of loan funds.
3. SEDC will then prepare an advisory report for the Saratoga Springs City Council
recommending one of the following actions:
- Approve the loan application as submitted
- Approve with special modifications or loan covenants
- Deny the loan application
4. The Saratoga Springs City Council will consider the SEDC recommendation at one of their
regular meetings or any special meeting called for that specific purpose. Although the case file is confidential, the proposed terms for each loan are considered public information and will be voted on in open, public session. The City Council will review each completed application and SEDC report, and by majority vote will determine if the applicant's loan is to be approved or denied. All decisions by the City Council are final.
The application development and review process will normally be completed in approximately 30
days.
Loan Administration Procedures
After the applicant's loan has been approved by the City Council, the City's Office of Community Development will finalize all necessary paperwork.
1. The applicant will be required to sign a legal loan agreement with the City of Saratoga Springs. This agreement will state the total principal amount of the loan, the interest rate, the repayment schedule, and identify all conditions of the procedures for events of default by the borrower.
2. Unless expressly stated otherwise, the loan will require monthly payments of interest and
principal, made by the borrower to a designated City account, maintained at the Adirondack Trust
Company at its 473 Broadway, Saratoga Springs office.
3. Loan repayment will be structured as follows:
- Fixed asset loan repayment will carry a term not to exceed the useful economic life of the
specific circumstances related to a project.
- Repayment schedules for working capital loans will be negotiated on a case by case basis, with amortization generally not to exceed 3-5 years.
- Deferral of principal and/or interest payments may be considered if required by special
circumstances.
- Participation in revenue and cash flow streams, beyond the face rate of the note, may be
required to compensate the Program for unusual risks or special terms established by the
project.
4. The cost of the Program's legal work and other attendant ancillary expenses will be paid by the borrower (a charge of between 2% and 4% of the loan principal) to facilitate the loan closing. This facility fee may be a onetime charge or charged on an annual basis as determined by the City Council. Fees may be paid directly by the applicant or deducted from loan proceeds at closing. Any costs incurred by the borrower for separate legal counsel or other services in connection with loan procedures will be the sole responsibility of the borrower.
A closing will be scheduled for each project, at which time all documents will be executed
including any security agreements required to protect the City of Saratoga Springs.
Funds will be advanced at the closing (if appropriate) or following this date subject to the
submission by the borrower of all required documentation for stipulated or phased advances (e.g., construction loans).
Monitoring Activities
The City of Saratoga Springs will maintain current documentation of the performance for each
loan, regarding all terms and conditions imposed by the Program, as stated in the loan agreement. These may include, but are not limited to, the following conditions:
- Project development costs
- Other loan financing
- Job creation
- Information concerning household size and income of low and moderate income employees
- Notice of available jobs and required hiring procedures
- Job training
In addition to receiving payments of principal and interest on all outstanding loans, the City will collect periodic reports and other documentation as required for each project as follows:
- Financial Statements
- Records of inventory
- Aging of accounts receivable and accounts payable
- Any other relevant documentation OCD deems appropriate
For additional information, please contact:
Saratoga Economic Development Corporation (SEDC)
28 Clinton Street
Saratoga Springs, NY 12866
(518) 587-0945
or
City of Saratoga Springs
Office of Community Development
City Hall - Room 10 - 474 Broadway
Saratoga Springs, NY 12866
(518) 587-3550
