Milwaukee Economic Development Corporation
MEDConline.com
Second Mortgage Taverns, liquor stores, gun shops are not eligible. Please click here for the Application for Financing
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% 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 & Financing
Maximum Loan Size
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. 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
MEDC loan maturity and amortization matches the commitment from the participating bank.
Interest Rates
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
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
Please click here for the Personal Financial Statement
Capital Access Program Ineligible Projects Uses Advantages Fees Timing
The Capital Access Program is structured as a public/private loan portfolio reserve program. Participating members, along with borrowers, set aside funds as a reserve against loan losses. This is accomplished through the creation of a loan loss reserve which enables banks to be more aggressive while prudently making and structuring loans. The bank makes the approval determination, structures the loan, and simply files a one page form with MEDC.
Each bank has funds earmarked in its name, and can withdraw funds from its CAP reserve to cover losses on any loans it enrolled in the program. The full amount in the bank's reserve is available to cover losses from any bank loan made under the program.
Payments ranging from 6 to 14% of the loan amount are made into each bank's reserve every time the bank makes a loan under the program. The borrower makes a premium payment, the bank matches that payment, and CAP matches the combined total of those two payments. The bank may recover the cost of its payment from the borrower through several means, such as a higher interest rate, up-front fees, or some other combination. These payments and fees can be financed as part of a loan.
For example, if the borrower pays the minimum 1.5% of the loan amount, the bank would match that with another 1.5%, and CAP would contribute 3%, for a total of 6%. At the maximum, the borrower would contribute 3.5%, the bank another 3.5% and CAP 7% for a total of 14%.
The reserve enables a bank to be more aggressive in making loans. If loans are paid off without loss, the bank preserves its reserve funds. While there is a clear incentive for banks to be prudent, the program enables lenders to be cautious while making riskier loans, since they can withstand a substantially higher loss rate than could be tolerated on a conventional loan portfolio.
List of Participating Banks
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