"Small Business Forgivable Loan Agreement Template" - Iowa

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Download "Small Business Forgivable Loan Agreement Template" - Iowa

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SMALL BUSINESS FORGIVABLE LOAN AGREEMENT
This Agreement is entered into as of the ___ day of _____________, 20__ among the
City of Muscatine, Iowa (the “City”), _________________________[Name of Business] (the
“Company”) and __________________________ [Name of individual guarantor] (the
“Individual(s)” and together with the Company, the “Borrower”).
WHEREAS, the City, pursuant to and in strict compliance with all laws applicable to the
City, and in particular the provisions of Chapter 15A and Chapter 403 of the Code of Iowa, has
established its Small Business Forgivable Loan Program (the “Program”) in order to make
available public funds for the support of economic development initiatives and business
development in the community; and
WHEREAS, the Program includes the funding of forgivable economic development
loans to private entities for the funding of improvements to local businesses and business
facilities; and
WHEREAS, this Small Business Forgivable Loan Agreement (the “Agreement”)
between the City and the Borrower has been prepared to facilitate the funding of a forgivable
economic development loan in the maximum amount of $____________ (the “Forgivable
Loan”) from the City to the Borrower in connection with certain improvements to be undertaken
by the Borrower (the “Improvements”), which Improvements are described on Exhibit A hereto;
and
WHEREAS, the Improvements are for the benefit of the Borrower’s business (the
“Business”), which Business and the regular operations thereof are described on Exhibit B
hereto; and
WHEREAS, Chapter 15A of the Code of Iowa authorizes cities to provide grants, loans,
guarantees, tax incentives and other financial assistance to or for the benefit of private persons;
NOW THEREFORE, the parties hereto agree as follows:
A.
Borrower’s Covenants
1.
The Borrower agrees to undertake and complete the Improvements by
______________________ (the “Completion Date”), subject to any extensions granted to the
Borrower by the City, and to use the proceeds of the Forgivable Loan solely in connection
therewith. All improvements must be completed by the first anniversary of the origination of the
loan.
2.
The Borrower agrees that it will own and operate the Business as described on
Exhibit B throughout the term of the Forgivable Loan, aside from any interruptions in regular
operations resulting from construction of the Improvements and with any exceptions from such
regular operations as are agreed to in writing by the City.
.
SMALL BUSINESS FORGIVABLE LOAN AGREEMENT
This Agreement is entered into as of the ___ day of _____________, 20__ among the
City of Muscatine, Iowa (the “City”), _________________________[Name of Business] (the
“Company”) and __________________________ [Name of individual guarantor] (the
“Individual(s)” and together with the Company, the “Borrower”).
WHEREAS, the City, pursuant to and in strict compliance with all laws applicable to the
City, and in particular the provisions of Chapter 15A and Chapter 403 of the Code of Iowa, has
established its Small Business Forgivable Loan Program (the “Program”) in order to make
available public funds for the support of economic development initiatives and business
development in the community; and
WHEREAS, the Program includes the funding of forgivable economic development
loans to private entities for the funding of improvements to local businesses and business
facilities; and
WHEREAS, this Small Business Forgivable Loan Agreement (the “Agreement”)
between the City and the Borrower has been prepared to facilitate the funding of a forgivable
economic development loan in the maximum amount of $____________ (the “Forgivable
Loan”) from the City to the Borrower in connection with certain improvements to be undertaken
by the Borrower (the “Improvements”), which Improvements are described on Exhibit A hereto;
and
WHEREAS, the Improvements are for the benefit of the Borrower’s business (the
“Business”), which Business and the regular operations thereof are described on Exhibit B
hereto; and
WHEREAS, Chapter 15A of the Code of Iowa authorizes cities to provide grants, loans,
guarantees, tax incentives and other financial assistance to or for the benefit of private persons;
NOW THEREFORE, the parties hereto agree as follows:
A.
Borrower’s Covenants
1.
The Borrower agrees to undertake and complete the Improvements by
______________________ (the “Completion Date”), subject to any extensions granted to the
Borrower by the City, and to use the proceeds of the Forgivable Loan solely in connection
therewith. All improvements must be completed by the first anniversary of the origination of the
loan.
2.
The Borrower agrees that it will own and operate the Business as described on
Exhibit B throughout the term of the Forgivable Loan, aside from any interruptions in regular
operations resulting from construction of the Improvements and with any exceptions from such
regular operations as are agreed to in writing by the City.
.
3.
The Borrower agrees to repay all un-forgiven principal of the Forgivable Loan in
five (5) equal annual installments due on the first, second, third, fourth and fifth anniversary of
the Completion Date (_________________, _________________, _________________,
_________________, and ________________) (each, an “Anniversary Date”), unless the loan is
otherwise forgiven in accordance with the conditions hereinafter set forth in Section B.2. The
Borrower hereby acknowledges and agrees to the loan repayment forgiveness conditions set forth
in Section B.2 of this Agreement. The Borrower reserves the right to prepay such principal in
any amount at any time without penalty. Payment of principal on the Forgivable Loan shall be
made to the City of Muscatine at 215 Sycamore, Muscatine, Iowa 52761-3840 (the “City
Administrator’s Office”) by 4:00 p.m. on each Anniversary Date, as set forth herein. The
Borrower shall execute a promissory note in favor of the City to evidence its obligations with
respect to the Forgivable Loan. The promissory note shall be in substantially the form as set
forth on Exhibit C hereto.
4.
The Borrower agrees to submit an annual report to the City not more than 45 days
not less than 30 days before each Anniversary Date demonstrating to the satisfaction of the City
that the Borrower continues to maintain ownership of the Business and is operating the Business
in accordance with its regular operations, as described on Exhibit B hereto. The Annual Report
shall include such information, documentation and/or records as the City may require, which
information, documents and/or records are listed on Exhibit B hereto.
5.
The Borrower understands the city will file UCC-1 form.
B.
City’s Obligations
1.
The City hereby agrees to deliver to the Borrower proceeds of the Forgivable
Loan in its entirety in the amount of _______________________ ($____________) on the date
hereof.
2.
The City will file UCC-1 Form to secure a position as a creditor for its loan until
expiration.
3.
Subject to the adequate demonstration (as set forth in Section A.4 above) by the
Borrower, the City agrees to forgive one-fifth (1/5th) of the principal amount of the Forgivable
Loan on each Anniversary Date such that if the Borrower continues to own and operate the
Business as covenanted in Section A.2 above until the fifth Anniversary Date
(______________________________), the Forgivable Loan would be entirely forgiven.
Promptly following discharge of the Borrower’s obligations under the Forgivable
4.
Loan, whether by repayment as set forth in Section A.3. above, forgiveness as set forth in
Section B.2. above, or a combination of repayment and forgiveness, the City agrees to cooperate
with Borrower to file a release of the Mortgage or the Financing Statement at Borrower’s
expense.
C.
Events of Default, Remedies & Offset.
1.
The occurrence of any of the following shall constitute an Event of Default:
-2-
a.
The Borrower shall fail to complete the Improvements by the Completion Date.
b.
The Borrower shall cease to own or operate the Business as covenanted in Section
A.2 above.
c.
The Borrower shall fail to make when due, whether by acceleration or otherwise,
any payment of principal of the Forgivable Loan.
2.
If any Event of Default described in Section C.1 shall occur and be continuing for
a period of five (5) days after notice of such Event of Default has been given to the Borrower,
then the City may declare the outstanding unpaid principal balance of the Forgivable Loan to be
forthwith due and payable, whereupon the Forgivable Loan shall immediately become due and
payable, in each case without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, anything in this Agreement to the contrary notwithstanding.
D.
Administrative Provisions
1.
This Agreement may not be amended or assigned by either party without the
written consent of the other party.
2.
This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the parties.
3.
This Agreement shall be deemed to be a contract made under the laws of the
State of Iowa and for all purposes shall be governed by and construed in accordance with laws of
the State of Iowa.
4.
This Agreement shall remain in full force and effect during the time period (the
“Term”)
commencing
with
the
date
first
written
above
and
terminating
on
_____________________________ (the fifth Anniversary Date).
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The City, the Company and the Individuals have caused this Agreement to be signed, in
their names and on their behalf by their duly authorized officers, all as of the day and date
written above.
CITY OF MUSCATINE, IOWA
By ___________________________
Mayor
Date: _________________________
Attest:
_________________________
City Administrator
_________________________________,
COMPANY
By____________________________
Title: __________________________
Date: __________________________
_________________________________,
INDIVIDUAL
By____________________________
Title: __________________________
Date: __________________________
Notary Public:
State of _______________________________
County of _____________________________
Signed and sworn to (or affirmed) before me on
Date: _________________________________,
By: __________________________________,
Signature: _____________________________
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EXHIBIT A – IMPROVEMENTS
(Describe the improvements to be undertaken with the Forgivable Loan.)
-5-