Since 1983, DCEO has awarded approximately $140 million in Community Development Assistance Program (CDAP) Economic Development grants to more than 180 local units of government throughout the state to help them provide financial assistance to businesses locating or expanding within their boundaries. As financial assistance projects are repaid, the communities place the moneys in locally-administered Revolving Funds (RFs) that can be used to fund future economic development opportunities within each community. An estimated $100 million of those funds are already back in circulation, helping more than 3,300 businesses obtain the capital they need to expand operations in communities.
While most RFs do not make large financial assistance packages, the contributions are an integral part of a business' overall financing package, leveraging larger amounts of private sector dollars. In particular, CDAP RF dollars can be an important source of "gap financing" for small, rural businesses.
Eligible Uses of Revolving Funds
CDAP RFs can be used as financial assistance to companies to encourage investment and job creation/retention. Local governments, utilizing CDAP-RF financial assistance proceeds, may lend to for-profit and not-for-profit businesses. Another eligible use of these recaptured funds is that local governments may construct public infrastructure improvements that directly support private capital investment and job creation from identifiable, non-speculative projects.
Rules of Thumb
CDAP RF may provide no more than 50% of the overall project, exclusive of any refinancing of existing debt. The amount lent by an RF may not exceed the current DCEO limit of $15,000 loaned for every full-time-equivalent (FTE) job created / retained by the project.
No speculative project financing (jobs must be created or retained in a timely manner as a result of RF investment in a specific, identifiable project). At least 51% of the jobs created/retained as a result of the project must meet the U.S. Dept. of Housing and Urban Development (HUD) "Section 8" family income guidelines. Projects funded by RF funds must be monitored on the local level to insure borrowers are meeting the 51% low-to-moderate income goals for each financial assistance project.
When a community with an existing RF applies to DCEO for a new CDAP, their grant request will be reduced by the amount of the balance of the fund. It is therefore advantageous to the community to substantially draw down their fund (make several financial assistance projects) prior to submitting their new application, or plan to contribute the local balance to the project.
RF communities are responsible for reporting fund activity to DCEO semiannually on July 31 for the period of January 1 through June 30 and January 31 for the period of July 1 through December 31. Report forms must include the amount of non-RF dollars included in the projects and number of jobs created or retained as a result of the loan.
For more information on this program, please call 217-558-2842, TDD 800-785-6055.