City of Saginaw, Michigan

SEDC Underwriting Policies

  • Each applicant is subject to a non-refundable $250.00 application fee.  This fee must be submitted with the application.
  • $220,000.00 maximum loan assistance to any (start-up or existing) business.
  • Comprehensive business plan with cash flow projections and projected balance sheets are required for businesses.  (Year 1 by month and Year 2 by year)
  • Business and/or Personal Income Tax statements are required.  Three years of Income Tax returns are required for existing businesses.
  • Minimum 10% equity investment required by the applicant. Applicant's personal investment must be verified before disbursement of funds.
  • All Officers debt will be subordinate to SEDC's loan.
  • Credit file verification is required that indicates satisfactory credit history.
  • If business is incorporated, personal guarantees are required by all principals involved having 20% or more ownership.
  • UCC Lien Searches to determine collateral position are required when applicable.
  • Loans secured by real estate shall be supported by Appraisal or tax bill indicating (SEV) State Equalized Value.
  • Title Search required for loans secured by Real Estate.
  • Creation of one Low-Moderate Income Job per thirty-five thousand ($35,000) dollars borrowed.  The time frame in which jobs to be created will be mutually decided prior to the SEDC board's loan review, and will be determined on an individual basis depending on the industry and cash flow of the perspective business.  All Low-Moderate Income jobs to be created must be done within 18 months of signing the promissory note.
  • Maximum maturity for loans secured by personal or business property other than real estate, 10 years. Maximum maturity for loans secured by real estate, 7-15 years. (Subject to change pending board approval)
  • If applicant has outstanding loans with SEDC, there is a 24-month time frame from date of last loan before applicant is eligible to apply for additional funds.  Granting of additional loans must be in participation with another financial institution.
  • All loans must be current before advancing new funds.  The customer must also have a good track record of timely payments.
  • Loan applications are required for all applicants.
  • Applicant must have a bank approval and receive written maximum amount approved or applicant must have two written bank denials from at least two banks before SEDC is considered. (No CDBG Funds should substitute for available Private Funds).
  • Monies disbursed for loans will first come out of the revolving loan fund.  When there are no longer funds available in the revolving loan fund disbursements will be from the program budget.
  • All projects involving new construction, rehab or renovations using Block Grant funds, must comply with Davis-Bacon Act regulations.
  • Any applicant being denied must wait at least 6 months before reapplying.

SEDC Must Document Each Loan Request To Determine If The Loan Meets HUD Requirements Of:

  • Creation or retention of job opportunities for low to moderate-income persons. If the purpose is to create, the position must be created within a reasonable stated time frame. Have customer sign acknowledgement that creation of jobs will be monitored.
  • Meeting selected urgent needs (Natural Disasters)
  • Public Benefit Determination / Necessary and Appropriate Determination.

Any non-adherence to these underwriting guidelines could result in a high risk and/or unfavorable loan.