Businesses located in the City of Milwaukee can take advantage of fixed rates of interest as low as current U.S. Treasury rates. MEDC will finance 25% to 40% or up to $500,000 of the total project. Eligible uses include building construction, renovation, improvements, real estate purchases, equipment purchases, and in limited cases, working capital. Projects totaling $80,000 to $1.25 million
are best suited to this program. MEDC’s mortgage/lien may take a subordinated position behind the bank’s loan for the project.
Eligible Projects
Maximum Loan Size
Loan Terms
Eligible Projects & Financing for Second Mortgage Program
• Business must be for-profit and located in the City of Milwaukee.
• Business must create or retain jobs, or increase the tax base.
• Land and building purchases.
• Building construction and additions.
• Soft costs associated with construction.
• Equipment purchases.
• Limited amounts of working capital may be financed only if fixed assets are part of the total project.
• Speculative or commercial rental real estate projects may be eligible if the project will create a significant
increase in the tax base or the tenant business will create a substantial number of new jobs.
Taverns, liquor stores, gun shops are not eligible.
Maximum Loan Size for Second Mortgage Program
MEDC will finance 25% to 40% up to $500,000 of the total project. A minimum 10% down payment is required from the borrower. A larger down payment or extra collateral is requested in cases of start-up businesses, special-purpose real estate, or collateral shortfalls. A participating bank must finance at least 50% of the total project. An example of a typical project:
Bank $200,000 50%
MEDC $160,000 40%
Borrower's Cash $ 40,000 10%
Total $400,000 100%
Loan Terms for Second Mortgage Program
MEDC loan maturity and amortization matches the commitment from the participating bank.
Interest Rates for Second Mortgage Program
Fixed interest rates are set at time of loan approval and matched to U.S. Treasury Notes of similar terms. MEDC's current interest rate is 5.25%.
Fees for Second Mortgage Program
No application fee. Attorney document preparation fee is approximately $2,000-$2,500 and cannot be financed. Normal out-of-pocket closing costs.
Loan Conditions for Second Mortgage Program
• Unlimited personal guarantees of owners are required.
• Guarantee of operating business is required.
• Bank receives a first mortgage/lien on the project for its portion of the financing.
• MEDC's mortgage/lien may take a subordinated position behind the bank's loan for the project.
• Loan amortization is based on useful life of assets financed and term of the private lender's commitment up to 25 years.
• No prepayment penalty.
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The Capital Access Program (CAP) can provide access to financing for companies, especially start-ups and small businesses, which may not be able to obtain conventional financing. CAP is a flexible loan loss reserve program that provides lenders with a way to fund projects considered too risky for conventional lending. This is accomplished through the creation of a lenderspecific
loan loss reserve. CAP is structured as a public-private loan loss reserve program. Each bank participating in CAP has its own reserve to protect against losses on loans approved by the bank and enrolled under the program. The lender, along with
the borrower, set aside funds as a reserve. This combined total of reserve funds is matched by MEDC. If a borrower defaults, this reserve can be used to reduce the bank’s loss. If the funds are not needed, they become part of a permanent reserve for future loans made by the lender through CAP.
Participating Banks
Eligibility
List of Participating Banks for Capital Access Program:
Associated Bank
JP Morgan Chase Bank
Community Bank Group
First Business Bank – Milwaukee
Legacy Bank
M&I Marshall & Ilsley Bank
North Milwaukee State Bank
Park Bank
TCF National Bank
Tri City National Bank
US Bank
Waukesha State Bank
Eligibility for Capital Access Program
• Non-profit, as well as for-profit businesses are eligible.
• Works well for short-term loans and lines of credit.
• Loan size: $1,000 to $250,000.
Taverns, liquor stores, gun shops and passive real estate projects are not eligible.
Loan Terms for Capital Access Program
• Bank must have a signed Participation Agreement on file with MEDC.
• The bank sets its own criteria for determining whether to make the loan.
• The bank determines the loan term, interest rate, fees, collateral requirements and other loan conditions.
• Bank determines reserve percent for each loan.
• The bank submits to MEDC a one-page form about the loan with notification that the fees are deposited
in the loan loss reserve account.
• MEDC remits matching amount to the bank for deposit into the loan loss reserve account.
• Reserve = 3% to 7% of loan.
• Minimum contribution is 1.5% each, from bank and borrower.
• MEDC matches combined contributions up to 7.0%. If bank and borrower each contribute 1.5% of the loan amount, MEDC
contributes 3.0%.
• Fees plus earned interest accumulate in a bank controlled account.
• Bank taps CAP account for shortfall on collection. Recoveries must be re-deposited into the CAP account.
• There is no processing delay and virtually no paperwork.
• Fast turnaround.
• Few eligibility rules.
• Bank makes credit decision.
