Types of Loans and Costs

The UML Fund offers three loan products that can be used as tools in empowering and growing small businesses.

Traditional Micro-loan

Available to start-up and existing businesses in Boxelder, Davis, Morgan, Salt Lake, Summit, Tooele, Utah or Weber counties, our Traditional loan offers funding up to $10,000. Applicants are required to demonstrate how the funds issued by the UML Fund can be repaid by their completion and presentation of an in-depth business plan, complete with financials, projections and proformas. This loan's maximum term for repayment is five years with a fixed interest rate of prime plus 5%.

Who Can Apply for a "Traditional Micro-loan"?
Small business owners who:

• are unable to access traditional sources of financing and
• have a new or existing business and are located in Salt Lake, Davis, Summit, Tooele or Utah County.*

* To be available in Weber, Boxelder and Morgan counties in late 2000.

How long will it take to get the funds?
Credit committee meetings are held every three weeks. Completed business plans and applications need to be submitted approximately 2 ‡ weeks prior to these meetings. Depending upon how far along the applicant is with their business plan, it takes 3-6 weeks.

Childcare Provider Loan

Changing family employment patterns and welfare reform changes have led to increased demand for child care services. Facilities need to expand to accommodate the increased demand, and loan capital is needed. With the support of Providian Bank for the loan pool, the UMLF proposes to add a new loan product designed for family based child care providers.

Product(s) - Loans to childcare providers will be done in one of two ways or a combination of both, depending on the need and use of funds.

1) Working capital loans of up to $10,000 - will be structured like "traditional" UMLF micro-loans. There will be a 5 year maximum term the rate will be prime plus 5%.

2) "Construction" related of up to $25,000 - for improvements to bring location into compliance with state regs to run a child care business. These will have a maximum term of 7 years and the rate will be prime plus 3%.

In cases where there is a combination of uses, the interest rate will be blended. No borrower may have any more than $25,000 outstanding at any one time.

Who can apply for a "child care provider"?
Small business owners who:

• are unable to access traditional sources of financing and
• have a new or existing in-home or center child care business and
• are located in Salt Lake County.

Potential Loan Uses:

• Classroom and playground equipment needs
• Playground fencing
• Building improvements to comply with state child care licensing requirements
• Applicant needs specific to operation of child care business
• Heating/plumbing needs
• Storage equipment
• Computer technology needs
• Accreditation or program enhancement needs
• ADA compliance; adaptive equipment; space modifications

How long will it take to get the funds?

Credit committee meetings are held every three weeks. Completed business plans and applications need to be submitted approximately 2 ‡ weeks prior to these meetings. Depending upon how far along the applicant is with their business plan, it takes 3-6 weeks.

The "Under 3 Step Loan"

The "Under 3 Step Loan" is designed for a largely unserved segment of the market needing even smaller loans, perhaps $500-$3,000. This loan product differs from our traditional loan not only by available amount, but by requiring, in many cases, a co-signer for the funding. This loan is structured as a series of graduated shorter-term loans that require accelerated repayments as a pre-requisite for subsequent loans. Rates range from prime plus 5% to prime plus 8%.

The "Under 3 Step Loan" is different and unique in that:

• it uses a "stepped" methodology, which means that in some cases, borrowers receive a relatively small first loan, (0-$500) for a relatively short term (2-18 months), in order to ensure capacity to repay and development of a positive relationship with and commitment to the UMLF program.
• follow-up loans are offered that can be progressively larger for longer terms, depending on the entrepreneur's needs, repayment history with the program and repayment capacity.

Likewise, it gives the borrower an opportunity to develop a relationship with and commitment to the UMLF over the course of the first couple of loans, learn how to manage repayments and the importance of paying on time. The possibility of a larger loan in the future is a strong incentive for the borrower to repay the current loan on time. First and even second loans may be for a smaller amount than originally requested, and may even be too small to have much of an impact on the business. However, the first two loans is a critical investment in the borrower/UMLF relationship, and sets the tone for future, larger loans.

Who can apply for an "Under 3 Step loan"?
Small business owners who:

• are unable to access traditional sources of financing and
• have an existing business with some history of sales and
• are located in Salt Lake County.

The UML Fund is designed to help people who cannot borrower from traditional lenders such as banks and finance companies. Applicants should exhaust all sources prior to considering the UMLF. If you, or key partners, have sufficient personal wealth that you could borrow money elsewhere, the UML Fund will not approve your loan.

How long will it take to get the funds?
Upon receipt of a complete application, as little as 10 working days.

UMLF Loan Product Summary

LOOK AT A:	"Traditional" Micro-Loan $3,000-$10,000	"Child Care" Loan $500-$25,000 (Working capital - up to $10,000) ("Construction" up to $25,000)	"Under 3" Step Loan $500-$3,000
IF:	You are starting a new or operating an existing small business and need funds for equipment, supplies and/or working capital.	You are operating a child care business and need funds for classroom & playground equipment, building improvements to comply with state licensing requirements, technology and/or program enhancement needs	You are making extra household income by selling a product or providing a service to friends and neighbors and need a small amount of funds for materials, supplies and/or small equipment.(you are a business owner!)
For:	Start-ups & Existing Business (in Boxelder, Davis, Morgan, Salt Lake, Summit, Tooele, Utah or Weber counties)	Start-up and Existing Family or center based providers BusinessIn Salt Lake county	EXISTING businesses ONLY (showing some history ofsubstantiated sales) In Salt Lake county
Length of Loan Term:	Maximum term of 5 years	Working capital- 5 year max "Construction" 7 year max(Blended where appropriate)	2-18 months (variable)
Interest Rate:	Prime plus 5%	Working capital:Prime +5% "Construction": Prime +3%	WITH Co-Signer* Prime +6%	WITHOUT Co-signer: 1st loan:Prime+8% 2nd loan:Prime+7%
Application Fees:	$20	$20	$20
Loan Original	1% per year of the loan	1% per year of the loan	3% of loan
Recording	$25-$50	$25-$50	$25-$50
Required Information:	Business Plan UCC available collateral Possibly titles, trust deeds, etc. Personal guarantee Credit check	Business Plan UCC on available collateral Possibly titles, trust deeds, etc. Personal guarantee Credit check Copy of license from Dept. of Health	Expanded Application UCC on available collateral Possibly titles, trust deeds, etc. Personal guarantee Credit check 2-4 references Co-Signer Business updates for subsequent loans
Approval Method	UMLF Credit Committee through Personal Presentation	UMLF Credit Committee thru Personal Presentation	UMLF Internal Committee(Loan Officer and Exec Director)
CoSigners must *be over 21 years old, *not reside in the same household, & *live in the 5 county lending areas.

Loan Fees

Application Fee - A $20.00 fee submitted with the application and business proposal package, for the costs involved in the initial management assessment and credit review process by the UML Fund. This is the only out-of-pocket fee associated with the loan.

Loan Origination Fee - This is financed into the proceeds of the loan. BE SURE TO CONSIDER THIS IN YOUR USE OF FUNDS. Examples are as follows:

Other Fees -For items required for the loan closing such as lien searches, filing, recording, etc. (typically $25-50). Note: IF the applicant elects to go through the credit pre-screening process, there is a $25.00 fee which must be submitted with the application for pre-screening.

NOTE: The UMLF origination and recording fees will be deducted from the approved loan amount.

What is the Role of the UMLF Staff?

• To serves as your advocate to help you through the process and make the best presentation possible.
• Staff does NOT influence the outcome of the credit decision

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