Loan Documentation & Administration
If a predevelopment loan is approved, the following will constitute the loan documentation and administration requirements.
LOAN DOCUMENTATION
Loan Commitment Letter
This letter states the amount of the approved loan, loan terms, and any special conditions pertaining to the loan commitment.
Loan Agreement and Promissory Note
Borrowers must enter into a Loan Agreement and Promissory Note with CDFA using CDFA’s standard form. The Loan Agreement and Promissory Note includes the ‘maximum loan amount’ that CDFA might provide to the project along with the terms governing the loan.
Collateral Documentation
CDFA will determine the appropriate security for the loan (in communication with the Borrower). Examples include a Mortgage and Security Agreement be signed and filed with the County to place a lien on the land and/or building subject to the loan; A UCC Financing Statement will be filed with the County to place a lien on equipment or other business assets. For all projects, a mortgage may be placed in a subordinated position to other mortgages. Additional forms of security may also be considered.
Disclosure of Finance Charges (399-B)
Outlines the basic terms of the loan and any fees to be charged at loan closing.
Corporate Resolution or Municipal meeting minutes
The borrower will be asked to provide documentation expressing the authority for the borrowing organization to borrow up to the ‘maximum loan amount’, to grant guarantees or assignments (if required), and to designate an individual to sign the documents with CDFA on the borrowing organization’s behalf. A written resolution or meeting minutes documenting the corporation or municipality’s approval is required.
In cases where the borrower and the developer are separate, legal entities, both the borrower and developer are required to execute the loan documents. In addition, the developer, as the recipient of the construction/final loan proceeds that will retire CDFA’s loan, may be required to guarantee repayment. In some cases, the CDFA loan will be closed prior to the creation of the entity that will serve as the developer. In such cases, the loan agreement may stipulate that the borrower will have a separate developer agreement and guarantee executed when the development entity is formed.
Attorney Opinion Letter (Municipalities only)
Verifies the review of the loan documents.
Additional Conditions to Closing
Loan closing may be subject to additional conditions relative to the individual circumstances of the loan.
LOAN ADMINISTRATION
Loan Disbursements
After a loan is executed, the borrower submits claims for reimbursement through CDFA’s Grants Management System (GMS) and attaches invoices approved for payment, as well as work products, and other documentation. If all or part of the disbursement will cover the cost of an application or commitment fee, instead of an invoice, borrower attaches a copy of the document indicating the amount to be paid, the date when payment is required and the name and address of the payee. Detailed instructions for submitting claims in GMS are provided with signed loan documents.
Repayment Terms
The full amount of principal and accrued interest is due and payable on or before the earlier of (i) the closing date for the final project financing package, or (ii) the 15th day of the 25th months following the execution of the Loan Agreement and Promissory Note. There is no penalty for prepayment. CDFA may forgive repayment of this loan if, in the sole opinion of CDFA, the project becomes infeasible due to financial, regulatory, or other circumstances beyond the control of the borrower. Borrower must submit a written request to forgive repayment with a detailed explanation why the project will not move forward and why the borrower is unable to repay the balance owed.
CDFA requires that borrowers pay their monthly payments via electronic funds transfer/ACH system (excepting payments during the interest-only period). Borrowers must complete an ACH registration form in GMS following loan approval are asked to provide CDFA with banking information so that CDFA will set up the automated payments with their bank to be drawn on the borrower’s bank account on the same day each month.
Loan Modification
If project costs and activities justify, the borrower may request an increase in the loan amount above the approved ‘maximum loan amount’ in the loan agreement. The request must be submitted in writing via GMS, along with detailed justification and a revised project budget. If CDFA approves an increase above the previously approved loan amount, CDFA will execute a Loan Increase Commitment Letter. The letter revises the schedule of approved costs and disbursements contained in Exhibit A of the loan agreement and serves functionally as a loan amendment. Loan Modifications may be subject to Other Fees as described in the Loan Terms section above.
Reporting Requirements
Once a loan is closed, CDFA reserves the right to request and receive annual financial statements from the Borrower. Failure to provide financial information in a timely basis will result in Borrower being in default of the terms of this Loan and result in Lender charging Borrower a late fee as outlined in Loan Agreement and Promissory Note.
Reporting
Borrower must provide a brief progress report on the overall project with each claim request. If the borrower does not have a claim to submit in a calendar quarter, borrower must provide a brief written update on project progress by the end of each calendar quarter (March 31, June 30, September 30, December 31).