Small Business Loan Program

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General Information

Rick Farley
Phone: (530) 538-4307
Fax: (530) 538-2539
E-mail: businessassistance@cityoforoville.org

Introduction

The City of Oroville’s Enterprise and Revolving Loan Fund (RLF) Programs have been established to provide critical capital needs to businesses and real estate projects that will create and/or retain jobs and increase the community’s tax base.

Purpose and Objectives

The Enterprise/RLF Programs are designed to provide no more than on-half of the project’s total financing requirements. The Enterprise/RLF Program Funds will only provide the funds necessary to bridge the “financial gap” that allows the project to move forward. The Enterprise/RLF Program Funds are targeted to businesses and projects that have the greatest potential for long-term job creation and/or retention, particularly jobs created and/or retained to benefit target income group households.

Funds can be used for:

  • Working Capital
  • Inventory Purchase
  • Equipment Acquisition
  • Real Property Acquisition, Construction, and Rehabilitation
  • Furniture and Fixtures

The State Community Development Block Grant (CDBG) Program funds the Enterprise/RLF Program. Loans are not made from the General Fund.

Economic Benefits and Objectives

The following elements are critical in the selection of loans for the Enterprise/RLF Program:

  • Existence of a “financial gap”
  • At least 51% of the jobs created and/or retained must be from TIG households.
  • Loans must meet underwriting criteria

There is no minimum loan amount. However, loans will require additional approval by the State Department of Housing and Community Development (HCD) and loans exceeding $250,000 will need HCD loan committee approval.

Credit Requirements

A loan applicant must 1) Be of good character 2) Show ability to operate a business successfully 3) Have enough borrowing ability or equity to operate on sound financial basis 4) Show proposed loan is of sound value 5) Show past earning records and ability to repay loan.

Loan Terms and Conditions

  • Term: Up to 25 years
  • Interest Rate: Based on needs and demonstrated “financial gap” not to exceed 5%
  • Pre-payment Penalty: 5% of the outstanding loan balance if prepaid during the first 12 months.
  • Job Creation/Retention: Must create one full-time job (1,750 hours annually) per $35,000, or two permanent part-time jobs (875 hours annually), can be aggregated.
  • Loan Fee: Two points (2%), with a minimum of $250.00 loan packaging fee and any direct costs incurred in excess of one point (1%) including: loan processing and closing fees such as recording fees, attorney fees and escrow fees.
  • Collateral Requirements: All Enterprise/RLF Loans shall be fully secured by collateral.

Leveraging

One private dollar for equity and/or debt for every Enterprise/RLF dollar lent.

Eligible Applicants

Eligible applicants include ongoing and start-up private, for profit business concerns, corporations, partnerships, sole proprietorships, and cooperatives, incorporated and licenses, and are located in or expanding to the City of Oroville.

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