Minority Business Enterprise Division | Minority Direct Loan Program

Minority Direct Loan Program

Criteria For Loan Application Evaluation

The following areas will be evaluated by the ODOD staff in making a determination that the business is eligible to receive Minority Direct Loan financing:

1. Ability To Repay

Can the business demonstrate (through historical and/or projected financial statements) that it has the ability to generate sufficient cash to pay all financing from this project?

2. Management

Does the business possess sufficient management capability and expertise to handle the project?

3. Working Capital

Has the business demonstrated sufficient equity and/or lines of credit/bank loans to cover all working capital needs for both the existing operation and any expansion?

4. Need

Can the business demonstrate the need for the State’s incentive financing to make the project go forward? For example, is the lower rate from the direct loan needed because cash flow is limited? Has the business demonstrated that it cannot finance the project itself or only with bank financing? Can the applicant demonstrate that the proposed project will have a completion value at least equal to the total amount of money expended on the construction, acquisition and/or improvement of the project?

5. Job creation

The Minority Direct Loan Program guidelines endeavor to finance projects which demonstrate the creation of at least one job for each $35,000 of State investment during the first three years of the project.

6. Job Retention

If the applicant is claiming retained jobs from the State’s financing, there must be clear documentation of such retention satisfactory to the Department.

7. Minimum Assistance Necessary

The Department will determine minimum assistance, if any necessary to cause a project to go forward. This is essential in order to conserve funds and assure that assistance is extended throughout the State

8. Occupancy

The applicant must demonstrate that all facilities financed by the program will reach a reasonable occupancy level within one year after completion. If a project involves the construction of a new building, at least 75 percent of the building must be occupied by the operation business. If a project involves the purchase and/or renovation of an existing building, at least 51 percent of the building must be occupied by the operating business.

9. Collateral

All assets offered as collateral for the State loan must have third party evaluations (i.e. appraisal).