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6 <br /> VOLUNTEER FIRE DEPARTMENT LOANS <br /> Because of North Carolina law,CCB can offer below-market, tax-exempt rates (m(:aning that the interest <br /> income from such lane accrues to C. R f <br /> aepartmenu (VFll). <br /> Qualifications <br /> In order to qualify for the tax-exempt rate,the loan must meet the following criteria: <br /> 1) The political subdivision involved (usually the county) must certify two things: <br /> a) That the VFD is a "qualified" VFD within the jurisdiction of the political subdivision,meaning <br /> that: <br /> The VFD provides fire fighting services in an area which is not provided any other fire fighting <br /> services AND <br /> The fire fighting services are required by written agreement with the political subdivision; <br /> AND <br /> b) They approve of the borrowing. This approval cannot be given until a public hearing is held. <br /> 2) The VFD must certify that more than 90%of the loan proceeds are to be used for the acquisition, <br /> construction, reconstruction or improvement of a firehouse or fire truck used or to be used by the VFD. <br /> If this qualification is not met,you can still make the loan. but it must bear a market interest rate. <br /> 3) The borrower must be a VFD. Rescue squads,ambulance services,etc. are not eligible for tax-exempt <br /> rates. <br /> Additional Documentation Required <br /> In addition to the usual documentation,you must have the following: <br /> 1) A copy of the VFD's articles of incorporation <br /> 2) A certificate of good standing from the North Carolina Secretary of State(see page 6 for a sample) <br /> 3) A letter from the political subdivision certifying the information in I under"Qualifications" above (page <br /> 7) <br /> 4) A Certification of Use of Funds (page S). This form i,.i•.aiiable trom Commercial Loan Administration. <br /> 5) An Agreement (page 9-10). This is also available from Commercial Loan Administration. <br /> 6) A letter pertaining to being a qualified small issuer (page 11). <br /> Interest Rate <br /> The rate can be either fixed or floating. If it is floating,you will quote the rate as a percentage(for example, <br /> 75%or 80%)of prime. If the rate is fixed,you will need to draw the loan with a balloon provision (as you <br /> would with any fixed-rate loan). <br /> To determine the rate,call Commercial Loan Administration to get the factor used to convert the tax-exempt <br /> rate to an after-tax equivalent. <br /> CREDIT MANUAL Section 30, Page 5 <br /> Revision Date: 8/15/90 <br />