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RREDC is an “economic development lender” which means that our loans need to help with one or more of the following:
1. Building the economic base by increasing the amount of goods and services sold outside of Humboldt County
2. Creating or retaining jobs
3. Improving blighted areas
4. Bringing business to underserved areas.
We can only make loans to businesses based in Humboldt County.
RREDC often participates with other lending institutions. For example, we work with local lenders in providing “gap” financing on real estate secured loans that are owner occupied (at least 51% of the space).
How does this work? Suppose a borrower needs $300,000 to purchase a new facility to house their business. The lead lender willing to finance $210,000 but the borrower only has $40,000 for a down payment. RREDC may be willing to provide the remaining $50,000 in the form of a second deed of trust on the property. Our involvement happens at the invitation of the lead lender and we work concurrently in getting our respective loans approved. Of course, the borrower’s cash flow needs to be sufficient to service the debt to the lead lender, RREDC, and to any other creditors.
Assuming that the property appraises at $300,000, the combined loan-to-value would be 87% ($260,000/$300,000) or 96% on a discounted basis.
RREDC's collateral guidelines allow a maximum combined-loan-to-discounted value of 100%. Some examples of owner-occupied real estate deals that we have financed in conjunction with a lead lender include Pachanga Restaurant (Eureka), Tofu Shop (Arcata), Ferndale Pizza Co. (Ferndale), Andre’s Body Shop (McKinleyville) and the Blacksmith Shop (Ferndale).
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| RREDC 520 E Street, Eureka, Ca., 95501
Phone: 707-445-9651 FAX: 707-445-9652 | |
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