Business Loan Program

Loans can be made for up to $200,000 to qualifying businesses for working capital, inventory, equipment and leasehold improvements, as well as real estate.

• Businesses must be located in the City of Madison
• Businesses are expected to increase employment by approximately one job for every $25,000 in loan funds received.

Rates are fixed, generally at or near commercial lending rates. Loans may be made up to $200,000, with our average borrower receiving about $60,000.

Terms are generally consistent with the life of assets to be financed. We often offer amortization periods that are longer than the loan term, thus reducing payments but requiring a balloon payment or MDC refinancing at the end of the term.

Credit Standards are designed to allow MDC to make higher risk loans than private lenders. While MDC does have established cash flow and collateral requirements, we can accept security from outside the business and are flexible in evaluating collateral and determining debt repayment ability. MDC generally requires personal guarantees. MDC's loan decisions are made by a Committee made up of MDC Directors and volunteer private-sector loan officers. Applications are reviewed and approved monthly.

Fees are charged to cover costs of loan preparation and processing. MDC usually charges two percent (2%) of the principal amount.

Second mortgage financing through the BLP program:

• Ability to lend up to 90% of purchase in conjunction with a conventional first mortgage. Low down payment requirement allows business to preserve cash for working capital.
• Rates at or near the commercial bank rates. Will consider fixed or variable rate options.
• Loan processing fee of no more than 2% of MDC loan amount.

Example:

Total purchase price of $300,000
Bank 1st mortgage ~ $210,000
MDC 2nd mortgage ~ $60,000
Owner's cash ~ $30,000

Requirements for Eligible Borrowers:

• Businesses must be located in the City of Madison, and
• Businesses are expected to increase employment during the term of the loan by approximately one job for every $25,000 in loan funds received.

MDC generally requires personal guarantees. MDC's loan decisions are made by a Committee made up of MDC Directors and volunteer private-sector loan officers. Applications are reviewed and approved monthly.

Applications are available by calling or visiting the MDC office or by clicking on the Loan Application button to the left of this Fact Sheet.

Business Loan Application131.06 Kb