One aspect of BCDI is a loan fund linking small enterprises in Bowdoinham to neighbors who are willing and ready to invest in a local undertaking that will benefit the individual and the community. The focus is on farms, food, forests, the music and art that accompany them and the businesses that support those sectors. The proposed loans are very low interest with flexible repayment terms tailored to meet the specific needs and capacities of the beneficiary. The amount of a BCDI Loan may be a minimum of $500 and maximum of $15,000. The repayment of the loan is expected within 12 months of disbursement, with a maximum repayment time of 24 months. (These terms may be adjusted as the fund matures).
BCDI has found that a number of town residents are interested in participating in the fund. The approval of an application by the BCDI Board, after vetting the request through a screening committee, will trigger a solicitation of the required funds from potential investors, the receipt, disbursement, collection and accounting of those funds, as well as the distribution of repayments and accrued interest. Three loans have been made so far: one to Small Wonder Organics to purchase a tractor; one to Life Force Farm to build a high tunnel greenhouse; and a third to Left Field Farm to purchase two greenhouses. The Small Wonder Organics loan was repaid a full three months in advance, and over half of the investors requested that their investment be “rolled-over” to fund new opportunities. The result has been that after the disbursement of the most recent loan, there remains a positive balance in the investment account. These funds will be used to fund future loan/investment opportunities, with the approval of the individual investors (see News for details)
How to Apply for a Loan
A loan application consists of the following:
1. A narrative that includes a description of the entity requesting the loan, the purpose of the loan, the anticipated time and modalities requested to repay the loan, how the loan will benefit the enterprise and the community.
2. Evidence of collateralization for the loan.
3. Evidence of the capacity of the entity to repay the loan in the proposed timeframe.
The Screening Committee may require supplementary documentation for final loan approval.
Criteria for approval of a loan application by the Screening Committee
1. The loan appears to be needed.
2. The loan will allow the applicant to undertake activities that will benefit the community as well as the applicant.
3. There is sufficient evidence that the loan applicant will be able to repay the principle and interest of the loan in the proposed timeframe. (These conditions will be established by the Screening Committee in consultation with the applicant.)
4. The standard interest rate will be set at 3%: 2% will be the return to the investor; 1% will be retained by BCDI to help cover operational costs. BCDI may consider additional/alternative “interest” on the loan in terms of benefit to the community that flows directly from implementation of activities supported by the loan. (These conditions will be established by BCDI in consultation with the applicant.) The BCDI Board will also require a fee of not more than $50 for managing the loan process look at more info.
5. The collateral offered by the applicant is acceptable.
6. Due diligence by the Steering Committee has established sufficient documentation to support the bona fides of the application.
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