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Gov. Baker To Announce Snow Storm Loan Fund

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As a result of significantly reduced patronage during recent snow storms, many Massachusetts small businesses have lost sales and fallen behind in meeting their financial obligations, including payroll. This can have a negative impact as it ripples through the local economy, on business owners and employees.

Often, small business financials cannot support traditional bank debt. Solutions available to them include hard money lenders, internet loan programs and credit card debt. All of these sources typically charge high fees and interest rates approaching or even exceeding 20% causing the small business to fall even further behind.

The following proposed loan program is meant to address this pressing need for impacted Massachusetts businesses.

A Proposed Micro Loan fund

 MGCC will make available up to $1,000,000 in loan funds to provide micro-loans of $5,000 up to $10,000 to small businesses, targeted to Boston, Gateway Cities and other communities in need. Anticipate this program to be available for disbursements through May 2015.

 Target outreach :

o MGCC current grantees (30 small business assistance agencies) and all Massachusetts based CDC’s and CDFI’s

o Boston Main Streets (19 neighborhood based agencies)

o Gateway City Economic Development Offices (26 city government offices) and any Main Street organizations in these cities

o All Massachusetts based Chamber of Commerce

o Massachusetts Small Business Development Centers

 Each target intermediary agency will be responsible for:

o Conducting outreach to their small business community to create awareness of the program

o Conduct initial screening to identify qualifying candidates and forwarding information and application to MGCC.

 MGCC would be responsible for:

o Final decision regarding loan approval

o Closing and funding the loan

o Managing the loan portfolio

o Monthly collection of interest and principal payments (direct debit)

 Proposed Terms and Conditions

o Loan amounts $5,000 to $10,000

o 3-year note with a 6-month moratorium on principal

o Annual interest rate 5%

o Personal Guarantee required

o All assets lien

o No prepayment penalty

o No commitment fee

o Financial reporting on an exception basis

o No adverse personal credit reports for the six months ending 12/31/14.

 Participating Agency Role:

o Ensure the business is existing and on-going

o Submit a one page application with following attachments;

-Prior year tax return

-Prior year personal tax return

-Signed personal financial statement

-Endorsement statement confirming the business was negatively impacted by the

snow storms of 2015

 General :

 The program is targeted to small businesses profitable in the prior year but suffering

cash flow problems due to recent loss of revenue.

 Agency participation is crucial to implementing the program rapidly and in as uncomplicated a way as is possible.

 MGCC will provide intake form, and program information for agency use and distribution

 MGCC will provide a standard promissory note and loan agreement format available for review by prospective borrowers in advance

For more information please call 617-337-2820.