Business & Equipment Loans Criteria

The Detroit Investment Fund will provide term financing for: the purchase of machinery, equipment and real property; the improvement of real property; and/or the restructuring of existing debt. In addition, working capital financing will be provided on a properly structured basis to meet the needs created by expansion.

The financing should result in the retention and expansion in the number of employees employed in the business and the following criteria must be met.

  • A business plan which demonstrates that the future financial results of the company will service the debt.
  • The business must have experienced and successful management with three years of successful operating experience.
  • The borrower must provide three years of financial statements prepared by a CPA. Audited statements are preferred; however, reviewed statements will be accepted for smaller borrowers.
  • Capital provided by the Detroit Investment Fund and other junior lenders must not exceed 50% of the capital base of the borrower.
  • Debt service coverage of senior debt equal to 1.20x.
  • Debt service coverage of total debt equal to 1.05x.
  • Borrowings for machinery and equipment should not exceed 90% of OLV (Orderly Liquidation Value) of junior and senior debt combined.
  • Borrowings secured by owner occupied real estate should not exceed 90.0% of junior and senior debt combined.
  • Capital loans provided by the Detroit Investment Fund will be extended for a maximum of 7 years with a maximum amortization of 15 years.
  • Security shall consist of a second position on all assets financed and an appraisal should be obtained from an approved appraiser.
  • Guarantees (full or partial) of the principals may be required.

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