Section 600.10  Purpose

 

a)         Through the Illinois Equity Investment Fund (Program), the Department of Commerce and Community Affairs (Department) will provide equity investments to small businesses in Illinois in cooperation with private sector lenders or other investors.  Projects supported with Program funds will be with industries in new advanced technology sectors which hold promise for job creation in Illinois and start-up and early stage businesses that demonstrate entrepreneurial talent.  The Department will accept applications from companies in a number of advanced technology fields.  Although no one technical area has been specified, the following areas have been shown to be growth industries for Illinois:   construction machinery; composite materials; drugs and medical products; electronic computing devices; electronic components; food and forestry products; printing/publishing; plastics; research labs; repair services; software; telecommunications equipment; transportation equipment; and wholesale trade. Program funds may be used for such costs as the purchase of real estate and machinery and equipment, working capital, research and development costs, and organizational fees.  The ultimate purpose of the Program is to provide employment opportunities for Illinois citizens, through job creation.

 

b)         Any small business operating in Illinois may make an application for financial assistance under this program.  A small business includes any for-profit business in Illinois organized as a sole proprietorship, partnership, corporation, joint venture, association, or cooperative.  For the purposes of this program, a small business is one which has, including its affiliates, less than 500 full-time employees, or is determined by the Department not to be dominant in its field.

 

Section 600.20  Application Cycle

 

Applications under this Program will be accepted throughout the year.  The Department will supply interested businesses with an application package upon request.  Applications submitted by the 25^th of each month will be reviewed.  Submissions after the 25^th will be held for consideration during the next monthly review cycle until equity funds are exhausted.

 

Section 600.25  Application Documentation

 

The application must include documentation of the following:  

 

a)         History of the Company – a brief history of the business and past employment growth.

 

b)         Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

 

c)         Corporate Financial Statements – historical corporate financial statements for the past three years and interim statements dated no more than ninety days prior to application including:  

 

1)         Profit and Loss Statements;

 

2)         Balance Sheets;

 

3)         Cash Flow Statements; and

 

4)         Disclosure of Contingent Liabilities.

 

d)         Three Year Projections – three year projections of the Profit and Loss Statement and Balance Sheet and a one year Monthly Cash Flow Projection.

 

e)         Site Map – an outline of the general location of the project on a site map, reflecting the location of any floodplain areas.

 

f)         Land and Building Information (if applicable) – for land and/or building acquisition, an MAI appraisal and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates.

 

g)         Description of Machinery and Equipment (if applicable) – identification of major equipment or classes of equipment to be acquired with the Department's program funds; for acquisition of new machinery and equipment, attachment of reliable vendor cost estimates; for moving and installation costs, attachment of written estimates; for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price. 

 

h)         Description of Working Capital (if applicable) – a detailed explanation of the need for an use of the funds.

 

i)          Company Management – a listing of those people that are responsible for the management of the company, their positions, and percentages of ownership.

 

j)          Personal Resume(s) – a resume for senior staff at the proposed project site.

 

k)         Personal Financial Statement – a personal financial statement(s) for each principal owning more than 20 percent of the company.

 

l)          Letters of Commitment – commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyer.

 

Section 600.30  Evaluation Process

 

Applications will be evaluated on the technical, market, and financial feasibility of the proposal to assure compliance with the requirements and the purpose of the Small Business Development Act (Sections 9-1, 9-2, 9-3, 9-5 et seq. of P.A. 84-109, effective July 25, 1985) (Act).  Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through resubmission (see Section 600.25).  This review and evaluation process will be completed within 30 days.  The evaluation will address the following criteria:

 

a)         Technical evaluation component – The Department will require applicants to show:  evidence of need for program funds in accordance with Section 9-5(c) of the Act, including identification of alternative funding sources pursued and leverage of other funds to cover 66⅔ percent of total project costs in accordance with Section 9-5(a) of the Act; project implementation readiness, including commitments from all lenders and investors; written cost estimates which support project costs; and evidence of job creation, including written assurances from the company which identify the number and types of jobs to be created at generally a ratio of at least one job to each $5,000 of project funds.  A project with a lower ratio will be considered for funding if the application demonstrates severe need (e.g., distressed community with an unemployment rate which is considerably higher than the State's average; area with limited economic development projects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

 

b)         Financial Evaluation Component – The applicant's financial statements, including the annual balance sheet, profit and loss statement, forecast of expenses and earnings, and related information, will be reviewed through a standard credit analysis which will determine the:  liquidity and debt coverage for the project; ability of the company to manage debt; business trends; and projected earnings.  This data will be compared to similar data for companies in the same industry using "Robert Morris Associates Annual Statement Studies" (1985), if such industry is evaluated by this source. This standard credit analysis will determine the financial stability of the company in accordance with Section 9-5(f) of the Act.

 

c)         Market Evaluation Component – The Department will require applicants to show the market feasibility of each application received and shall require applicants to undergo a technical feasibility analysis conducted under the auspices of a designated university technology commercialization center if the Department lacks the expertise to evaluate the market feasibility of an application (See Section 46.19a of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a).

 

Section 600.40  Selection for Funding

 

For any application which meets the criteria of Section 600.30, Department staff will then conduct a field visit to verify information in the application which will lead to the final funding decision.  Top ranking applications will receive equity funds until all available funds are expended.  The field visits will analyze application characteristics, which include:

 

a)         a comparative assessment of projects in terms of job creation, in relation to the funds requested;

 

b)         a verification of submitted application information; and

 

c)         past performance of the applicant under previous departmental programs, if applicable (e.g., success in previous projects and level of compliance with previous grant agreements).

 

Section 600.50  Funding Limitations

 

In accordance with Section 9-5(b) of the Act, the Director will waive the funding limitation governing the amount of the equity and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 600.30 and 600.40, and subsequent job creation from occurring.

 

Section 600.60  Allowable Leverage

 

In addition to the forms of leverage defined in Section 9-5(a) of the Act, allowable leverage will include:

 

a)         Under-utilized land and/or buildings which are a part of the project when the appraised value qualifies them as under-utilized.

 

b)         A cash outlay by the principals resulting in them becoming stockholders.

 

c)         Funds expended by the business prior to the date of a loan or grant award; existing in-state equipment, land, buildings, furnishings, inventory (already owned and being utilized); lines of credit; post-project costs (such as operational expenses); and debt refinancing will not be considered as leverage.