6.0. EDSR 01-13-2003 Item 6
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Developmen(
DATE: January 13, 2003
SUBJECT: Consider Micro Loan Extension — Charlene R. Barder, Edward J.
Barder and Margo L. Foster (formerly dba Olde Main Eatery)
Issue
The EDA has a Micro Loan with the former owners of Olde Main Eatery restaurant,
Charlene Barder, Edward Barder and Margo Foster (hereinafter collectively called the
Borrower). Upon the loan's balloon payment recently becoming due, the Borrower has
requested the EDA's consideration of an extension of the Micro Loan for an additional
term.
Background
In October of 1997 a $50,000 Micro Loan was awarded to the Borrower who was doing
business as Olde Main Eatery. The terms of the loan include an 8.5%interest rate amortized
over 15-years with a five-year balloon payment. In September 2000 the EDA re-amortized
the loan to adjust monthly payments after the Borrower had fallen behind in payments. In
August 2001 the Borrower sold the restaurant operation but retained ownership in the
building. The loan is secured by a UCC-1 filing on equipment and fixtures related to the
building, assignment of leases and rents, a mortgage filing, and guaranty by all three
individuals.
Per the loan agreement, a balloon payment was due in December 2002 for the balance of the
Micro Loan in the amount of$40,791.43. The Micro Loan Fund Policy allows for a 2-year
extension with refinancing at a market rate of interest. Staff discussions with local lenders
indicate a current market rate between 6% and 6.5%.
Since the restaurant was sold, the Borrower's loan repayment history has been very good.
The Borrower and their primary lender, First National Bank of Elk River, have requested
that the EDA consider extending its Micro Loan for an additional term.
Action Requested
Staff recommends that the EDA authorize refinancing the balance of the Micro Loan with
• Charlene Barder, Edward Barder and Margo Foster over a 7-year amortization at a market
rate of 6.25%with a 2-year balloon payment.