The City of Tuscaloosa Innovate Tuscaloosa program's purpose is to encourage a new or missing service, to provide economic development through business and to create and/or retain low to moderate income jobs, encourage business development and expansion, and stimulate private investment in the recovery area.
Businesses must be located, relocating or developing in zones one or three (10th Avenue or Alberta areas) as defined by the eligibility map below. Any funds loaned must be used for the business located within the designated areas and cannot be used for any other locations.
Note: Nonprofit agencies, 501(c)3 organizations, single-family and multifamily developments, financial institutions and religious/civil institutions are not eligible.
Loan Amount, Terms and Conditions
Borrowers may request a maximum of $100,000.
All loans will be subject to a monitoring process to determine compliance with the U.S. Housing and Urban Development and related regulations. If the project remains in compliance over the term of the loan agreement, which shall be one-year minimum, the loan will be deemed forgivable. If the project is determined to be in non-compliance, the loan will be due immediately in full.
The project must commence within 60 days of receiving the loan proceeds. Those receiving loans must be able to show that at least 51 percent or more of the job positions at the business are either known to be currently held by low to moderate income persons at the time the loan is received, or are not currently held by low to moderate income persons but could reasonably be expected to transition to low to moderate income persons within two years. Per U.S. Housing and Urban Development guidelines, one full-time equivalent job that benefits a low to moderate income person must be created or retained for every $50,000 loan or grant. The City of Tuscaloosa reserves the right to hold the applicant in default if the loan proceeds are not spent in accordance with approved project description.
Collateral and Guarantees
Applicants will be required to provide 100 percent of collateral equal to the loan value. Collateral may be provided through business assets or personal assets.
For all applicants using personal assets as collateral value, the City will require a personal guarantee by the borrower(s), as well as submission of personal financial statements to prove personal financial stability. In addition, the borrower(s) shall agree to subordinate all officer debt and defer monthly payments to all officers to the City’s loan.
Use of Loan Funds
Loan funds may be used for:
- Land, building purchase and/or improvement
- Machinery and equipment purchase and/or installation
- Leasehold improvements
- Working capital
- Inventory purchase
- Refinancing of existing debt
Refer to loan zone map for eligibility requirements.
The Loan Process
You must complete the following steps to apply for a loan:
- Supply a project budget and description.
- Supply a business plan.
- Supply required financial documents.
- Upload the documents from steps 1-3 in the application below and follow the prompts.
- Submit your application online, or print and return it with all required attachments to Caramyl Drake at City Hall.
All loan applications will be accepted April 2-June 29, 2018.
The submitted loan application will be reviewed by City staff across a myriad of divisions for technical review. Applications that meet the eligibility requirements as described in this document will be asked to present their business plan in a pitch-type setting to City Council members at a Community Development Block Grant Committee meeting. Applicants will be forwarded to the Tuscaloosa City Council for final approval.
Loan Application Evaluation
The City of Tuscaloosa will evaluate all loan applications based on the following criteria:
- Neighborhood impact;
- Job creation and retention;
- Ability to start the project within 60 days; and
- The ability to repay the loan should non-compliance occur.
Special consideration will be given to minority or women-owned businesses, businesses that are new to the Tuscaloosa market, and businesses that provide a missing service. Due to the limited amount of funding allocated to the loan program, applications will be reviewed collectively, ranked and selected for the CDBG Committee “Pitch Competition.”
Step 1: Project Budget and Description
Supply a narrative that includes the following information:
- The dollar amount of the loan you are requesting
- A general description of how the loan funds will be used by your business
- Details of how the funds will be used and how they will enhance the activities of your business
- A proposed project completion schedule
If applicable, include the following in your narrative:
- Cost estimates of any purchases planned with loan funds along with backup of estimates
- Any other financing secured through private financing or other public funding that will be used for your project
- A listing and copies of architectural renderings, building permits issued, lease agreements or mortgage information for business location
Step 2: Business Plan
Your business plan is a requirement for the City of Tuscaloosa’s Innovate Tuscaloosa Loan program. It can also be used to procure additional funding from sources such as banks and investors.
All applications must include a typed business plan that contains the following:
Business Description. Your business description should include a company history, the current industry trends, customers and market potential, short and long-term goals, and future plans
Neighborhood Impact. Will your business create or retain jobs? How many of those jobs will be low to moderate income level (80 percent of area median income)? How will your business improve the community? Give a description of how your business will contribute to the City in addition to answering the questions above.
Product/Service Description. Give a detailed description of your product or service and explain product lines, equipment, suppliers, materials, pricing, etc.
Management and Business Operations. Provide a description of your management structure and describe your existing or proposed location, workforce, hours of operation and accounting methods.
Current Financial Situation and Financing Proposal. Provide a detailed snapshot of your current financial situation.
Additional Information. Include a table of contents and a list of references for any eternal documents that are included. Feel free to include items such as menus, promotional items or brochures that help explain your business.
Step 3: Financial Documents
The following financial documentation is required for loan consideration. Submit copies and keep the original documents.
Business Financial Information
For a business established for three or more years: Corporate federal and state income tax returns for the previous three years.
For a business established for one to two years: Corporate federal and state income tax returns for the years of operation along with personal federal and state income tax returns for the remainder of the full, three-year picture.
Personal Financial Information
Personal tax returns: Federal and state income tax returns, including all schedules for the members of the business that own more than 20 percent of the business equity are required for the years for which no business tax return is available to complete the three-year picture as listed above.
Personal financial statement: If less than 100 percent of the collateral from the business is offered to secure the loan requested, or the business has been in operation for less than three years, then complete the Personal Financial Statement section of the application on pages.