Revolving Load Fund
What is the Revolving Loan Fund (RFL)?
Cullman Electric is a member-owned cooperative dedicated to improving the lives of its members. To that end, Cullman EC created a Revolving Loan Fund (RLF) to help fund improvements to our community. We are accepting applications for loans from others with ideas on how to improve our community. These loans are being provided for projects that will significantly benefit rural areas. If an application is approved, Cullman EC will work with local lenders and others to maximize the leverage of the RLF dollars so that the result is the maximum possible economic development. It is the further intent of Cullman EC to use the RLF program to supplement, but not compete with, capital that may already exist within the communities.
Who administers the RLF?
Cullman Electric Cooperative and its existing staff administer the fund “in house”. The RLF Loan Committee will be composed of CEC’s President/CEO, Chairperson, Vice Chairperson, Treasurer, Secretary, Vice President of Accounting & Finance, and Vice President of Member Services & Community Development. This 7-member committee will review all loan applications made through the RLF Program. This group will then present all applications to the Cullman EC Board of Trustees and make recommendations. The Cullman EC Board of Trustees makes the final decision regarding the approval or denial of applications. The CEO at Cullman Electric Cooperative acts as the RLF Administrator.
Do I have to be a Cullman EC member?
Loans are not restricted to Cullman EC’s service area. It is not a condition for approval that any applicant become a member of the cooperative.
Who can apply for this program?
Business ventures, including corporations, partnerships, sole proprietorships and cooperatives are eligible to apply. Also, public bodies, non-profit entities and tribal authorities are eligible.
What type of projects or activities are eligible?
Projects include, but are not limited to:
- Industrial/Commercial Development
- Small Business Expansion
- Small Business Start-up
- Business Incubators
- Community Infrastructure/Facilities
- Medical Facilities
- Training/Educational Facilities
Activities include, but are not limited to:
- Acquisition, or construction of commercial and industrial buildings and structures.
- Purchase of capitalized machinery and equipment with a useful life of at least five years.
- Acquisition of real property for economic development purposes only.
- Rehabilitation of deteriorated retail and commercial buildings occupied by the borrower.
What projects are not eligible for this program?
- Refinancing of existing debt, or payment to business owners or partners.
- Activities determined to be for investment purposes.
- General improvement loans related to normal replacement needs of a business and unrelated to business expansion/job creation.
- Agricultural production costs (i.e., cultivation, production, harvesting).
- Vehicles used for general purposes or that may be considered for personal use.
- Projects without any supplemental financing.
- Projects that are primarily working capital with limited security.
- Construction projects of a residential nature.
- Illegal activities and legalized activities (e.g. gambling casinos) that in the opinion of the Cullman EC Board of Trustees adversely affect RLF interests.
- Projects in which any director, officer, CEO, supervisor, or employee of Cullman EC, or close relative thereof, is an owner, stockholder, partner, or director, or which would, in the judgment of the Administrator of RBCDS, create a conflict of interest, potential of conflict of interest, or any appearance of a conflict of interest.
- Projects in which the recipient of a loan, would as a condition of loan approval, purchase or lease any real property, materials equipment or services from Cullman EC, its subsidiaries, or affiliates.
- Projects or activities that pay the salaries of any employee of Cullman EC, its subsidiaries, or affiliates.
What types of financing are available?
The RFL will offer two types of financing: Fixed Asset and Working Capital. Fixed Asset financing includes land, buildings, manufacturing equipment, office and work equipment, and Infrastructure improvements. Working Capital financing is available in a limited amount, and must be in conjunction with other RLF financing.
What happens during the application process?
Loans can be obtained from Cullman Electric Cooperative. All applicants for RLF funding will be required to complete a pre-application to determine eligibility and then a full application form. This second application must provide data which demonstrates that proposed projects are (1) economically feasible and (2) will provide benefits to rural areas, either through job creation or infrastructure improvements.
During the initial loan review, it will be determined if the project meets the goals of this program. If so, required information will be obtained and the process of credit analysis of the project will begin.
Upon successful completion of the steps in the credit analysis and upon subsequent approval by the RLF Loan Committee, the loan will be closed by the RLF attorney and all legal documents will be properly filed and recorded. RLF staff will maintain financial management systems and retain financial records in accordance with 7 CFR Part 3015, uniform Federal Assistance Regulations.
The RLF records will include an accurate accounting and source documentation to support each transaction involving the RLF. In addition, annual performance reports will be prepared for each project comparing actual accomplishments during the reporting period to the objectives established for the project. The RLF Program commits to the establishment of other required reporting procedures in accordance with USDA regulations.
If real property or other fixed assets are pledged to the RLF by the borrower, professional appraisals will be required on all loans. A list of approved appraisers will be compiled in the service area and an approved appraisers list will be chosen by the RLF Loan Committee. Cullman Electric Cooperative will be responsible for securing an appraisal from the borrower to establish the value of assets pledged.
Upon recommendation of a loan by the RLF Loan Committee and full Board approval, a loan commitment letter shall be mailed to the applicant. The applicant will have ten (10) working days from the date of the commitment letter to accept the terms and requirements of the loan.
The RLF staff will have thirty (30) calendar days from the date of approval by the Loan Committee to work with the applicant to develop loan documents to meet the terms of the loan and execute the applicable closing documents. In the event the RLF staff cannot execute the loan closing within thirty (30) calendar days, the RLF Loan Committee shall have the discretion to authorize an additional thirty (30) calendar days.
The decision will be based on the particular circumstances of the project. Prior to loan closing, the RLF staff shall ensure that the specific closing conditions have been met and all documents related to closing have been reviewed. In the event the RLF staff is unable to close the loan within sixty (60) calendar days, then the RLF commitment to fund the loan shall be withdrawn.
The RLF loan closing will be handled by the RLF attorney and the RLF administrator where all terms of the loan including repayment terms will be discussed in detail. An amortization schedule will be furnished to the applicant with scheduled principal and interest costs for the term of the loan. All closing costs will be the responsibility of the applicant. All applicable loan-closing documents will be recorded in the appropriate place of filing by the RLF attorney. All original loan documents shall be housed in the RLF administrative offices in a safe and secure location.
RLF loan proceeds will be disbursed from the RLF account with the presentation of acceptable documentation as required by the loan documents. The RLF administrator will be authorized to disburse RLF funds upon presentation of proper documentation. For security purposes, two (2) signatures will be required on any disbursement checks as authorized by the RLF Loan.