Question: Are there restrictions to the funds?
Answer: The funds must be utilized to provide matching loans to for-profit, small businesses in the defined community (city, multiple cities, county). Maximum loan size is limited to $45,000 E-Community funds per business*. The E-Community can decide the specific uses of funds that are allowed, but typically the following are approved uses: purchase of land, purchase of real estate, purchase of business inventory, purchase of business equipment, and working capital. The E-Community can decide the specific uses of funds that are not allowed, but typically the following are not approved uses: paying off or refinancing existing debt, salary or owners draw, payroll taxes, and building renovation not tied to a specific business.
*The E-Community funds are part of a larger funding package; so total loan or funding deal can be greater than $45,000.
Question: What is meant by matching loans?
Answer: The following scenario depicts a matching loan. Assume the applicant needs a total of $60,000. Also, assume the applicant is providing $10,000 of their own capital. Of the remaining $50,000 needed, the E-Community can provide no greater than 60% of that gap* (In this case, the E-Community funds could be no more than $30,000 of the $50,000 needed.) The other 40% minimum (in this case, $20,000 minimum) must come from a financial institution and/or a local/regional funding source. In this way, the E-Community funds “match” other loans.
*E-Community funds awarded to an individual business/project cannot total more than $45,000 in any scenario.
Question: If selected as an E-Community, where do the funds go?
Answer: NetWork Kansas establishes a separate bank account for each E-Community. The funds remain in the account until the E-Community has approved a loan and requests a portion of the funds from NetWork Kansas by submitting a formal Check Request and all necessary documentation.
Question: When an E-Community has approved a deal, how do they request funds?
Answer: Go to www.networkkansas.com website, click on Resource Partners, click on Partners Only Welcome, click on Partner Login. When selected as an E-Community, you will be assigned a UserID and password. This will allow access to the Check Request Checklist and instructions. Check request processing is overseen by Jamie Holfing, who can be reached at 785-296-0383 or jkhofling@networkkansas.com.
Question: What happens to the E-Community funds when a business repays their loan?
Answer: The loan repayment, as well as interest, is forwarded to NetWork Kansas to be deposited back into the E-Community account. In this way, the loan funds are replenished and available to be loaned out to another business.
Question: If a business defaults on their loan, is the E-Community responsible for reimbursing the bank account?
Answer: No. The E-Community has the discretion to pursue collection or legal action, at their expense, and if funds are recovered, they are to be returned to the E-Community bank account. If the E-Community chooses not to pursue collection or legal action, the E-Community account balance will be negatively affected by the default but the E-Community will not be liable for the balance of the defaulted loan.
Question: How quickly must the E-Community raise funds through tax credit donations?
Answer: E-Communities selected to participate in the 2012 round will be notified by October 26, 2012. At that time they will learn how many tax credits have been allocated. The E-Community Leadership Team is responsible for collecting donations and forwarding them to NetWork Kansas by December 14, 2012.
Question: How quickly must our E-Community loan funds be disbursed?
Answer: There is no timeframe specified for disbursement to businesses in your community. Our philosophy is that funding decisions should be made based upon each business's prospects for success and its ability to enhance the community in terms of economic and/or community benefits. Therefore, the disbursal rate for an E-Community’s loan fund varies based upon individual conditions. However, if an E-Community becomes dormant (i.e. there is no capital deployed for an extended period, such as 2 years) then it is possible that the E-Community’s funds would be reallocated.