Business Finance Assistance Loan Program
The Lansing Economic Development Corporation's (LEDC) Business Financing Assistance Program (BFAP) is intended to support business and economic development in the City of Lansing. The LEDC's primary goal for the BFAP program is to stimulate commercial and retail development.
Who is Eligible to Apply?
All properties that front Washington Square in the 100 North Block and 100 - 500 South Blocks, including the side streets of Ottawa, Michigan Avenue, Allegan, Lenawee, Kalamazoo and Hillsdale between Capital Avenue and Grand Avenue. The City Economic Development Corporation (LEDC) will make the final determination of eligibility. BFAP loans cannot be used for improvements to floors or portions of properties that will be used for residential purposes.
How Does It Work?
1. There must be a minimum of 10% owner's equity (new cash investment) in each loan project (10% of total project costs)
2. The loan amount could be up to 80-90% of total project costs if a letter of credit can be obtained or if the LEDC is allowed to be a holder of a first mortgage. Otherwise, the LEDC loan should be less than 50% of the total financed amount of the project.
3. No more than 10% of the LEDC loan shall be used as working capital for a project.
4. Applicant must obtain at least 2 bids for any project with renovation/construction of building.
5. A local bank will act as LEDC Loan funds dispersing agent on any construction project.
6. All closing costs will be paid by applicant.
7. The LEDC will consider loans up to a maximum of $250,000.00. However, exceptions to the maximum amount may be considered on an individual case basis.
8. The interest rate charged will be 1% below the prime rate at time of closing.
9. On a yearly basis, the LEDC will review and set the fixed interest rate offered to future loan applicants with the exception of loans that have a five-year balloon (loans made prior to LEDC Board approval of these revisions will not be effected).
10. Terms of loan will depend on the loan amount. For example: Loans between $10,000 and $50,000 7 year amortization Loans between $51,000 and $250,000 Up to 15 year amortization (With a five-year balloon)
11. Payments will be monthly and interest only for the first six months of the loan.
12. Applications must demonstrate proof of adequate collateral to cover the loan. Examples of "adequate" collateral fitting this description are mortgages on Real Estate or a Letter of Credit from a credible financial institution.
What is the Process?
1. Applicant meets with LEDC staff to review project.
2. Applicant submits "Lansing City Treasurer Information Request Form" to City Treasurer's Office.
3. Application and Project Plan is submitted to the LEDC.
4. LEDC office reviews Application and Project Plan to determine whether proposed project constitutes a public purpose within meaning of Section 2 of the LEDC Act (P.A. 338), and consistent with the BFAP program guidelines.
5. LEDC Board designates Project Area; recommends Project Plan and requests the Mayor to appoint temporary LEDC Directors to City Council for the duration of the project.
6. Council receives Project Plan, schedules public hearing.
7. Public hearing is held - Council approves Project Plan.
8. LEDC prepares letter of commitment for approval by LEDC Board.
9. Applicant agrees to terms of commitment.
10. Loan documents are prepared.
11. Loan documents are approved by the LEDC Board.
12. Loan closing takes place; funds are disbursed according to terms of loan documents.
13. It takes a minimum of 90-120 days to process a complete loan application, depending on size and complexity of the project.
