In an effort to help promote economic development throughout its service area, Southern Pine has established a Revolving Loan Fund (RLF). The fund is a pool of capital derived from grant monies, as well as money provided by the cooperative. The purpose of the RLF is to provide gap financing for start up, expansion, and new businesses that attract new jobs or provide much-needed public health or social services in the local communities served by the cooperative.
As borrowers repay their loans, the principal and interest is returned to the RLF to be loaned to other businesses to create additional jobs and stimulate local economies.
Eligible Businesses
- Business ventures - corporations, partnerships, sole proprietorships and cooperatives.
- Public bodies
- Non-profit entities
- Tribal authorities
Eligible Projects
- Industrial or commercial development
- Small business expansion
- Business incubators
- Community infrastructure or facilities that provide permanent jobs for area
- Medical facilities that provide permanent jobs for rural area
- Training or educational facilities
Eligible Activities
- Acquisition or construction of commercial and industrial buildings and structures
- Purchase of capitalized machinery and equipment with a useful life of 5+ years
- Rehabilitation of deteriorated retail, commercial and industrial buildings
Ineligible Purposes
- Refinancing existing debt or payments to business owners or partners
- Activities for investment purposes not directly related to job creation
- General improvement loans for normal replacement needs of business and unrelated to job creation
- Agricultural production costs (i.e. cultivation, production, harvesting)
- Vehicles for general purposes or personal use
- Projects without supplemental financing
- Working capital with limited security
- Residential construction projects
- Illegal or objectional activities as stipulated by the Southern Pine Board of Trustees
- Projects where any trustee, officer, general manager, supervisor or employee of the cooperative, or close relative, owner, stockholder, partner or director which would create a conflict of interest
- Projects where recipient of loan would, as condition of loan approval, be required to purchase or lease any real property, materials, equipment or servivces from the co-op, its subsidiaries or affiliates
- Projects or activities that pay salaries of any employee of the co-op, its subsidiaries or affliates
Advantages of RLF
- Has an attractive interest rate of prime or below.
- Allows for local control of funds
- Requires much less red tape and quicker reponses than many other types of funding requests.
- Leverages funding from local financial institutions as they increase funds available to local business concerns.
RLF Interest Rates, Conditions & Terms
- The maximum rate is the prime rate as published in the Wall Street Journal.
- The term is not to exceed 10 years.
- Building - 10 years.
- Real Estate - 10 years.
- Equipment - 5 to 7 years or anticipated life of the equipment.
- Working capital - 1 to 3 years.
- Loan servicing fees are no more than 1 percent per year of annual outstanding principal.
- Supplemental financing of 66 2/3 percent required which includes at least 10 percent equity.
- Security shall be first lien on real property, letter of credit, liens on building or equipment, accounts receivable and inventory for short term loans, or securities issued by federal government or its agencies
- Personal agreements may be required from partners or majority stockholders
Want to Learn More about RLF?
If you are interested in learning more about the RLF program, contact Southern Pine E. C. General Manager Vince Johnson at 251.867.5415 or via email at vjohnson@southernpine.org.