MACED CrowdMatch Loan FAQ
1Who is MACED?
MACED stands for Mountain Association for Community Economic Development. We are a non-profit Community Development Financial Institution (CDFI) that serves the 54 Appalachian counties of Eastern and Southern Kentucky. We offer loans and technical assistance to small and established businesses, including start-ups.
2What is the purpose of the CrowdMatch microloan?
We know it is hard to get all the capital needed to start a business. Many great ideas are supported by crowdfunding, but sometimes those funds are not enough to start a business. We want to help you fill in the gap with a 5% loan for an amount less-than or equal to the amount you raise by crowdfunding.
3What are the total costs?
A 2% origination fee that is due at closing. The interest rate on the loan is 5%. There is no pre-payment penalty. If you choose to pay the loan off early, save on interest payments.
4Are there any business advisory services included?
Once a loan is closed, you qualify for 12 hours of business advisory services. Most often we get requests for bookkeeping or marketing assistance, but if there is a different need, we will do our best to find a resource in other areas.
5What if I don’t make my goal?
If you don’t make your goal, you can always contact us for a different kind of loan. Our interest rates range from 5% to 9% depending on the type of business, purpose of the loan, loan amount and risk. We have loan products with 5% interest for energy efficiency loans, loans to pay for technical assistance, social enterprise loans and loans to artists.
6What are the loan requirements and conditions once I am pre-approved?
Pre-approval means that you are conditionally approved for a microloan. Once you meet your crowdfunding campaign goal, complete the on-line loan application and meet the following loan requirements, MACED will start working on your loan closing. Loan Requirements:
- Business must be in one of the 54 Appalachian counties in Kentucky as designated by the Appalachian Regional Commission (ARC).
- Business must not engage in illegal activity.
- If business is registered with the state of Kentucky, it must be in good standing.
- Business owner(s) must personally guaranty the loan.
- An UCC-1 “blanket lien” on all non-titled business assets will be filed as collateral for the loan.
- Crowdfunding supporters must be from a variety of friends, family and community members.
- Loan approval requires a conversation with a project specialist about the business. (A project specialist may determine this product is not a good fit for the CrowdMatch Microloan. We encourage borrowers to discuss their project with the project specialist before starting their crowdfunding campaign.)
- Existing MACED borrowers are not eligible for a CrowdMatch Microloan if the sum of their existing outstanding balance plus the CrowdMatch Microloan would exceed $50,000.
- The CrowdMatch loan application must be completed within 10 days of your campaign completion date to qualify.
7What is involved in closing?
Once you have finished your campaign and reached your goal, we will arrange a place and time for you to sign the loan documents. You can come to one of our offices (Berea, Paintsville, Hazard) or we can come to you for the closing. The closing documents include:
- Note - States the specifics of the loan.
- Loan Agreement - Goes into greater detail about your obligations and ours.
- Security Agreement - Specifies the collateral assets securing the loan and how the funds will be recovered should you stop making payments.
- Guaranty Agreement - You promise to personally repay the loan in the event that your business cannot.
- Federal Program - In most cases, you will also be asked to sign a document stating that you have not been debarred or suspended from any federal program (or if you have been, you provide an explanation).
- Publicity - A document allowing us to use your business in our publicity materials. This is optional and we will contact you before any such use.
- Payment - A document giving us the bank information to draw loan payments from your bank account. Please bring a voided check from the account you wish to use.
- Child Support - A document stating you do not owe child support payments.
- A voided check from the account you wish to use for automatic draft payments.
- A state-issued photo ID. If closing does not occur in our office, please bring a copy.
- A check or cash payment for the 2% origination fee.
- If the business is not a start-up, business income tax returns are required.