Small Cap TIF Business Loan Program

City of Madison — Small Cap TIF Business Loan Program

MDC Small CAP TIF 

MDC has forgivable loan funds available for growing businesses in the City of Madison’s TID Districts. MDC will make recommendations to the City of Madison to lend up to $250,000 to qualifying businesses for the purpose of purchasing real estate, financing real estate improvements or for purchasing capital machinery and equipment.

Eligible Borrowers (Qualifying Businesses)

  • Businesses located within the City of Madison TID Districts or within Half Mile Boundary Area.
  • Small businesses defined as companies employing between 5 and 100 employees
  • Businesses who intend to stay within the TID Districts for at least 5 years
  • Business must be a for-profit entity

Ineligible Borrowers (Nonqualifying Businesses)

  • Lending and investment institutions

  • Insurance companies

  • Golf courses, racetracks or gambling facilities

  • Non-for-profit entities

  • Businesses engaged in any illegal activity per local, state, or federal regulations with federal regulations taking precedence over local or state regulations.

  • Home-based businesses

  • Chain stores

  • Businesses with more than 100 Full-Time Equivalent (FTE) employees as of Feb. 28, 2023.

Amounts:

  • Loans up to $250,000 for real estate purchase, improvement, remodeling or expansion
  • Loans up to $150,000 for machinery and equipment purchases

Rates:

  • 0% interest for 5-year Term of the Loan
  • Loan Balance to be decreased by 20% each year the Borrower is located and operates within the TID District, and will be fully forgiven at the end of the 5 years from the date that the City’s adopted the Loan Authorization Resolution

Terms:

  • City will take the most mortgage security interest practicable in real estate and / or a practicable senior lien on machinery and equipment to secure the Loan
  • A personal guarantee is required of all principals with 20% or more interest in business

Equity requirement for existing businesses (10% of the total borrowing need) and 20% for start-up businesses

Credit Standards:

The presentation of loan requests will include at minimum the following documentation:

  • A statement of the purpose of the loan and the use of funds
  • A brief history of the cooperative
  • Brief bios of Board members and key staff people.
  • Financial Statements for the last three years consisting of:

o   Balance Sheet

  • Income Statement

  • Applicable Footnotes

  • Interim Financial Statements

·         A schedule of existing debt and a valuation of available collateral

·         An aging of accounts receivable and accounts payable

·         Projections of income/expense and cash flow of the proposed project

·         A statement of the job retention and creation

In addition to the above documentation, the presentation will include a summary of the analysis of the proposal detailing key ratios such as debt to net worth, current ratio, debt coverage, and any irregularities in the business’s performance and profitability over time and in comparison to industry standards.

Final loan approval to be provided by the City of Madison’s common council who will be presented a synopsis of the credit analysis and recommendation. Loans must comply with goals and TIF Law; no working capital nor loans for operating costs will be provided under this program.

Fees:

There are no closing fees on the Loan paid by the Borrower.

Applications:

Madison Development Corporation, 550 W Washington Avenue, Madison WI 53703, lending@mdcorp.org, 608-455-0320.

Last Updated: 05/23/2024