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COLLATERAL <br />Loans shall be secured by appropriate forms of collateral, with recorded first lien positions as <br />appropriate. Acceptable forms of collateral will be based on commonly accepted definitions <br />(fixed assets, inventory, accounts receivable, land, building, equipment, or personal assets). <br />Advance rates should be limited to the following percentages: Inventory - 50 %; accounts <br />receivable - 70% on accounts less than 90 days in age; unimproved real estate - 50 %; <br />commercial real estate - owner - occupied maximum 80% LTV, or 85% LTV on personal real <br />estate; new equipment - W /., and used equipment - 60 %. <br />SUGGESTED LOAN GUIDELINES <br />1. Creditworthiness - Although applicants will be considered with credit ratings showing a <br />history of accounts up to 30 days past due, preference will be given to borrowers with <br />good credit ratings. Applicants with bankruptcy or repossessions listed on their credit <br />report will, in most cases, be considered too great a credit risk for this program. <br />2. Cash Flow Coverage - The loan program is targeted to applicants with a cash flow <br />coverage, prior to new debt, (as hereafter defined) of not less than 1.1 to 1 to current <br />maturities of long -term debt. Cash Flow is further defined as net income plus <br />depreciation. <br />3. Debt To Worth - The loan program is targeted to applicants whose total debt does not <br />exceed net worth by 3 to 1. <br />LOAN PROGRAM ADMINISTRATION <br />Administration of this loan program shall initially be performed by the Orange County Economic <br />Development Commission. An outside vendor acceptable to the financial institutions and the <br />County will be utilized to underwrite and service these loans, to include billing and generating <br />administrative reports. <br />PROCEDURES <br />1. Applicants will be referred to the Orange County Economic Development Commission <br />who will meet with them and process applications. This process will utilize the services <br />of the NC Small Business & Technology Development Center. <br />2. Completed applications will be submitted to the Loan Committee no later than two weeks <br />prior to its next scheduled meeting. The Loan Committee will normally meet once <br />monthly. <br />V1 <br />