Request for Proposals for Revolving Loan Fund

April 12 2023

Please note the deadline is May 12 (not May 10 as noted in the RFP. 

Questions and Responses:

  • For the $3.6 Million for Loans with $400,000 for administrative and marketing by the EDC, does that leave the lender with $200,000 to operate the loan fund? Normally, there is a minimum of 10-15% of the loan fund amount to administer the loan fund.

The lender will operate the loan fund with a combination of the $200,000, a portion of the interest rates charged and fees.          

  • Does the lender receive any origination fees?

The lender can receive origination fees.

  • What fees by the lender are eligible under the program (Application fee, Fee to pull credit, loan fee (3%?),doc/closing fee)? 

Fees, such as those noted, can be charged under the program. The final combination of the $200,000, portion of the interest rate and fees charged will be set-forth in the agreement between the Solano EDC and lender. The response to the RFP should include the proposed compensation to the lender. It is the intent to make these loans reasonable to the borrower.

  • When we qualify the small business for covid recovery eligibility, do we ask them the 5 bullet points listed in the RFP from the Treasury qualification? or is there some other method of qualifying businesses?

There are a number of ways to qualify a small business. There are certain business sectors that are already deemed eligible, such as hospitality. Some may qualify by their location, such as in a Qualified Census Tract (Fairfield and Vallejo have such areas) or if it can be demonstrated that an area, such as a downtown, was impacted by the pandemic (using sales tax or other data), then any small business in that area qualifies. The Solano EDC will provide the Qualified Census Tract and other qualified areas. Finally, small businesses can be qualified based upon a review of their financial information to demonstrate that they were impacted.

  • How do we qualify the business for covid resilience and recovery eligibility?

See the response to the question above.

  • What justification is needed to prove that the business is impacted by Covid?

The loan file should document how eligibility was determined, such as business sector, location or financial information.

  • How is the flow of capital structured from the EDC to lender for the loan disbursement?

Solano County will provide the Solano EDC with monthly drawdown of funds. The Solano EDC will provide these funds to lender. If loans exceed the funds available, additional funds will be drawn down.

  • Once the loan is made/deal closed, who is the formal lender/fiduciary institution?

The lender chosen will be the formal lender/fiduciary institution.

  • Who actually holds the loan on their books, EDC or the lender? 

The lender will hold the loans on their books in a separate account.

  • Does the lender get arbitrage spread on the interest rate? If so, how much?

Do not fully understand the context of the question, we can discuss.

  • Do you have a minimum of 15% of the loan funds set aside for a loan loss reserve?

Solano County has made the determination that the ARPA funds must be used for direct loans and not for a loan loss reserve or guarantee.

  • Per the RFP, "Solano EDC also anticipates an annual per loan fee or a small portion of the interest rate charged on loans to off-set on-going costs. Lender should propose a structure in their response to the RFP." Does this mean that we are able to keep some of the interest as operational costs of the loans and/or lending process?

Yes, the intent is that the lender will keep some of the interest to off-set operational costs.

  • Statement of Work on page 6 states,  “Lender is also required to offer culturally fluent in-house marketing, marketing materials, loan information and outreach, or contract with other organizations to provide these services.” Does the cost to accommodate all of this come out of the perceived $200,000 to administer the fund?

The cost will come out of the total funds received by lender. Solano EDC will help in this area.

  • What is the plan for the funds coming from the repayment of loans?

The funds coming from repayment of loans will be used to loan to other small businesses in Solano County. It is important to note that the ARPA requirements, such as determining eligibility, do not apply to the repaid funds.

  • With the mention of 4 local lenders (2 banks/2 credit unions) and no specific role yet established, what services/monies might be provided from these lenders? (e.g. participation in a credit committee, provide technical assistance, provide additional funding to support the program and/or program administrator?)

It is anticipated that these lenders may provide additional funding, marketing, etc. The specifics will be worked out prior to a contract being executed between the Solano EDC and lender.