Revolving Loans

The Kerr-Tar Regional Council of Governments (COG) is a lender of last resort for small businesses in Franklin, Granville, Person, Vance and Warren counties seeking to start up or expand.

The COG's revolving loan program is funded by the U.S. Department of Commerce’s Economic Development Administration with matching grants from the state of North Carolina.

The loan program is designed to reduce unemployment and create or retain jobs in the five-county region. Preference is given to businesses that create the most jobs.

Eligible borrowers

Eligible borrowers include private, for-profit proprietorships, partnerships or corporations that are located or locating in the five-county Region K (Franklin, Granville, Person, Vance and Warren counties). Should a borrower move some or all of the created or retained jobs out of the service area during the term of the loan, the balance of the loan is due immediately.

Eligible expenditures

COG loans may be used for:

• Land and site improvements , including land acquisition, engineering, legal, grading, testing, site mapping and related costs associated with acquisition and preparation
• Building improvements , including real estate, engineering, architectural, legal and related costs associated with acquisition, construction, rehabilitation or demolition of buildings (construction must comply with the federal Davis-Bacon Act, requiring all workers performing construction/building improvements to meet federal prevailing wage requirements for the county of activity)
• Machinery and equipment , including purchase, delivery, installation, engineering, architectural, legal, insurance and related costs associated with acquisition and installation of machinery and equipment
• Costs contributing directly to the value of the project’s fixed assets , such as sales and use taxes and interest on interim construction financing
• Contingency reserves
• Start-up and working capital
• Infrastructure costs

COG loans may not be used for land banking/real estate investment companies; speculative building and development companies; passive investment companies, such as stocks, bonds and high-yield instruments; lending institutions; nonprofit organizations, associations and corporations; and members of the COG or Loan Review Committee.

Loan terms

The fund makes loans of $25,000 to a maximum of $200,000, or 75 percent of the project cost, whichever is less.

Terms for repayments vary by project. In general, maximum loan terms, based on purpose and collateral, are:

• Land and building – 15 years
• Machinery and equipment – 10 years
• Working capital – five years

The program offers interest rates that are typically one-to-two percent below the current prime interest rate (rates cannot fall below four percent) on the day the loan is approved.

A $1,000 deposit is required with the application, which will be applied toward legal fees related to loan preparation for successful applicants. Deposits will be refunded to unsuccessful applicants if no legal costs have been incurred.

Collateral requirements

The Loan Review Committee determines collateral requirements for each project to include such elements as:

• First mortgage on real property and improvements
• Second mortgage on real property of sufficient value to cover the first and second mortgages
• Security interest on movable machines and equipment, office furniture and fixtures
• Assignment of patents, licenses and life insurance on key personnel
• Security interest in personal property or chattel

For projects involving working capital loans, collateral needs might include:

• Liens on inventory, receivables, fixed assets and/or other available fixed assets of borrowers
• Personal guarantee

Application

Application documents may be obtained online or from the COG office, 1724 Graham Ave., Henderson, NC 27536.

For information, contact: