Agenda - 09-02-1997 - 9b - Laserfiche WebLink

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7 - COLLATERAL Loans shall be secured by appropriate forms of collateral, with recorded first lien positions as appropriate. Acceptable forms of collateral will be based on commonly accepted definitions (fixed assets, inventory, accounts receivable, land, building, equipment, or personal assets). Advance rates should be limited to the following percentages: Inventory - 50%; accounts receivable - 70% on accounts less than 90 days in age; unimproved real estate - 50%; commercial real estate - owner-occupied maximum 80%LTV, or 85%LTV on personal real estate; new equipment- 80%, and used equipment - 60%. SUGGESTED LOAN GUIDELINES 1. Creditworthiness - Although applicants will be considered with credit ratings showing a history of accounts up to 30 days past due, preference will be given to borrowers with good credit ratings. Applicants with bankruptcy or repossessions listed on their credit report will, in most cases, be considered too great a credit risk for this program. 2. Cash Flow Coverage - The loan program is targeted to applicants with a cash flow coverage, prior to new debt, (as hereafter defined) of not less than 1.1 to 1 to current maturities of long-term debt. Cash Flow is further defined as net income plus depreciation. 3. Debt To Worth - The loan program is targeted to applicants whose total debt does not exceed net worth by 3 to 1. LOAN PROGRAM ADMINISTRATION Administration of this loan program shall initially be performed by the Orange County Economic Development Commission. An outside vendor acceptable to the financial institutions and the County will be utilized to underwrite and service these loans, to include billing and generating administrative reports. PROCEDURES 1. Applicants will be referred to the Orange County Economic Development Commission who will meet with them and process applications. This process will utilize the services of the NC Small Business&Technology Development Center. 5