Government > Departments > Development and Planning > Business Loan Programs

Business Loan Programs

ALDC Revolving Loan Fund
Lending Policies & Guidelines (Amended 11/27/2001)

Goals & Objectives

Through its lending capacity, the Albany Local Development Corporation (ALDC) aims to facilitate the creation of new employment opportunities and the retention of existing jobs. Furthermore, the ALDC seeks to encourage investment that will expand the commercial and industrial tax base for the City of Albany.

Appropriate Determination

• Applicants must operate within the City of Albany or directly benefit the citizens of the City of Albany
• Project must have a significant economic impact to the City of Albany as defined by the Goals and Objectives
• Projects must create or retain (1) one full-time equivalent job for every ($35,000) thirty-five thousand of funds borrowed
• Borrower must demonstrate, but for the ALDC loan assistance, the project could not be undertaken

Eligible Activities

• Acquisition of real property
• Procurement of machinery and equipment
• Construction, renovation or rehabilitation of real property
• Purchase of fixed assets
• Consideration of retail or restaurant establishments will only be given if the project includes the improvement of real estate and achieves the Goals and Objectives of this policy

Ineligible Activities

• Interim construction financing
• Refinancing or retirement of existing debt
• Acquisition of non-fixed assets
• Financing of tax delinquencies
• Distribution of proceeds to owners, shareholders or investors

Requirements

• A minimum of 10% owner equity contribution
• Projects must generate sufficient cash flow to provide adequate debt-service coverage
• ALDC loan funds should leverage other financial resources
• Personal guarantees from all owners/investors/partners with a 20% or larger stake
• Participation of conventional lenders may be required as a source of funds
• Key Person Life Insurance may be required

Loan Terms

• Maximum Loan Amount: $100,000
• Loans are limited to 50% of the total project cost
• Interest Rates: Determined on a case-by-case basis
• Considering risk, exposure & current market analysis
• Real Estate: Not to exceed a 20 year term
• Machinery & Equipment: Not to exceed 5,7 or 10 years
• ALDC will take into consideration the useful (or IRS) life of the asset being financed and/or used to provide collateral coverage

Underwriting Criteria

• Loan applications will be reviewed based on the following:
• Feasibility
• Economic Impact
• Public Benefit
• Credit Worthiness
• Repayment Ability
• Acceptability of Collateral
• Need

The ALDC applies certain financial underwriting criteria standards that applicants must consider. Generally, these standards are:

• 1.05:1 debt-service coverage ratio
• 90% loan-to-value ratio when collaterized by real estate. Real estate values must be established by an acceptable appraisal
• 90% of the cost of new equipment may be considered towards the collateral value required to support the loan principal or 95% of the liquidated value of used equipment. Both established by adequate documentation or appraisals
• 75% of the value of soft items, such as, Inventory or Receivables may be considered towards collateral value required to support the loan principal

* All policy requirements and guidelines are subject to modification, determination and exemption on a case-by-case basis at the discretion of the ALDC Board of Directors.

ENTERPRISE COMMUNITY / Empire ZONE LOAN FUND:

Lending activity of this program is limited to prospective or existing businesses located within the designated Enterprise Community or Empire Zone areas within the City of Albany. The uses of loan proceeds are limited to the purchase of fixed assets or real estate and generally may not exceed one-half of the total project costs. Loans must have a significant impact upon the economic well being of the City of Albany and its residents. Potential loan recipients must demonstrate that one job will be either retained or created for every $35,000 lent and provide evidence that without the assistance of the ALDC, the project would not proceed. Owners are required to contribute a minimum of ten (10) percent equity to the project as a source of funds. Approval decisions are made a loan committee. Applications must be accompanied by a nonrefundable $250 application fee.

STATEWIDE ZONE CAPITAL CORPORATION OF NEW YORK:

The Statewide Zone Capital Corporation of New York (SZCC), is a privately owned loan and investment fund whose purpose is to expand new and existing businesses within New York's 51 participating economic development zones. The Zone Administrative Board (ZAB) of the City of Albany's Economic Development is pa