LaPorte County Revolving Loan Fund Management Plan

UPDATED: February 3, 2021 (CARES Act Addendum August 5, 2020)



Table of Contents


Introduction 5

Revolving Loan Fund Program Established 5

Comprehensive Economic Development Strategy (CEDS) 6


    CEDS and the Region 7

    Regional Economic Adjustment Problems and Economic Distress 7

    Plan to Deal with the Regional Economic Adjustment Problems and Economic Distress 8

    CARES Act Recovery Assistance 8

    RLF: Supporting Economic Adjustment Activities/Strategies 9


    Objectives 9

    Targeted Businesses 10

    Business Needs 10

    Other Programs and Activities 10


    Financing Needs 12

    Local Capital Market 13

    RLF Financing Niche 13


    Eligible Lending Area 13

    Allowable Borrowers 14

    Allowable Lending Activities 14

    Prohibited Lending Activities 15

    Loan Size 15

    Interest Rates 15

    Terms 16

    Fees 16

    Equity and Collateral 16

    Moratoria 17

    Start-ups 17

    Working Capital 17

    Prudent Lending Standards and Operating Procedures 17

    Credit Not Otherwise Available 18


    Target Percentages 18

    Private Sector Leverage 19

    Job Cost Ratio 19



Loan Portfolio Review 19

Updates to the Management Plan 19



    NIRPC 20

    NIRPC Finance and Personnel Committee 20

    LaPorte County RLF Managing Board 21

    Conflicts of Interest 21


    Application Process 23

    Eligibility Establishment 23

    Environmental Review 23

    Submittal Requirements from Each Applicant 24

    Application Review and Credit/Financial Analysis 25

    Recommendations to the LaPorte County RLF Managing Board 25

    Loan Closing Schedule, Fund and Close of Loan 25

    Confidentiality 25

    Other Compliance Requirements 26


    Loan Closing Documents 26

    Loan Agreement Provisions 27

    Loan Disbursement 27


    Loan Servicing 27

    Repayment 28

    Monitoring 28

    Job Creation 29

    Delinquency Management 29

    Loan Files 31


    New RLFs 32

    Accounting and Audits 32

    Administrative Costs 32

    Economic Development Administration Reporting 32

    Allowable Cash Percentage 33

    Audits 33




The Northwestern Indiana Regional Planning Commission (NIRPC) is a multi-purpose, sub- state, area-wide planning agency. NIRPC was originally established as the Lake Porter County Regional Transportation and Planning Commission in 1965, pursuant to State- enabling legislation. An amendment to this legislation in 1973 provided the

Commission with its current name and allowed for the addition of new member counties. Under this provision, LaPorte County joined NIRPC in 1979. In 1996, the legislation was again amended to provide a seat on the Commission for all mayors in the three-county region. The legislation was again amended in 2003 to provide for representation of all 41 cities and towns in the Tri-County area, and to specify that representatives must be elected officials, making NIRPC the metropolitan planning organization and council of government for the three-county region. The most current legislative change was in 2007 adding trustees of a township with a population over 8,000. This amendment added two more voting Board members, bringing the total number of Commissioners to fifty-three.

Revolving Loan Fund Program Established

High unemployment rates in the region in the mid 1980’s initiated LaPorte County to search to spark economic development. The revolving loan grant was pursued from the Economic Development Administration and NIRPC was chosen to administer the revolving loan fund given its neutrality in the Region and its capacity to run the program. In 1987, the Commission established the LaPorte Revolving Loan fund to account for the financial resources used for the revolving loan fund program in LaPorte County. The principal participants in the LaPorte County Revolving Loan Fund are the City of LaPorte, the City of Michigan City, and the Economic Development Administration.

The Revolving Loan Fund program is one of several tools of the U.S. Department of Commerce, Economic Development Administration (EDA), available to assist areas of high unemployment. A Revolving Loan Fund (RLF) is a pool of money used by an eligible recipient for the purpose of making loans to achieve certain economic benefits. As the loans are repaid by borrowers, the money is returned to the Fund to make other loans. In that manner, the Fund becomes an ongoing or “revolving” financial tool.

The goal of the RLF is private-sector job creation and capital formation. RLFs are not substitutes for conventional lending sources. Given the small size of the RLF program and the limited resources of each project, Revolving Loan Funds are not intended to match or replace the capacity of lending organizations. RLFs are designed to fill gaps in existing local financial markets and provide or attract capital which otherwise would not be available for economic development.

Comprehensive Economic Development Strategy (CEDS)

In 2019, NIRPC was designated by the U.S. Economic Development Administration (EDA) as the Economic Development District (EDD) for Lake, Porter, and LaPorte Counties. One primary function of an EDD is preparation of a Comprehensive Economic Development Strategy (CEDS) every five years. NIRPC’s current CEDS was approved and signed in 2019 and will be updated by April 2024. NIRPC maintains and implements the CEDS plan for the Lake, Porter, and LaPorte County areas. The CEDS represents the confluence of local public and private interests and is intended to be a roadmap to a bright future in Northwest Indiana. The deliberation and forethought incorporated in the CEDS is designed to help create jobs, foster a more stable and diversified economy, and improve quality of life. It provides a mechanism to coordinate the efforts of individuals, organizations, local governments, and private industry concerned with economic development.

The overall goal of the CEDS is to create a pro-growth business climate that fosters economic development in harmony with the environment. In order to achieve this goal, the CEDS calls for Northwest Indiana work toward these goals:

The RLF financing in the LaPorte County area will be used to foster growth in employment levels while working towards reaching the goals as identified within the CEDS. The LaPorte County Revolving Loan Fund Management Plan includes the current EDA Regulations for RLFs approved as of April 30, 2019.


    The 2019 CEDS reflects the priorities of the Region including the areas within Lake, Porter, and LaPorte Counties. The CEDS acts as a guide in improve the overall economic condition. The implementation of economic development resides with the public and private entities within Northwest Indiana. With the local CEDS and RLFs in mind local government is encouraged to consider the regional efforts and funding mechanisms available when working with private partnerships in recruitment, retention, and expansion efforts within the region.

    The CEDS identifies twelve traded clusters for LaPorte County as Automotive, Downstream Chemicals, Downstream Metals, Hospitality, Medical Devises, Metalworking, Paper and Packaging, Plastics, Production Technology, Upstream Chemicals, Upstream Metals, and Vulcanized Materials. Of these clusters 55% of LaPorte County’s employment is in Hospitality and Tourism, Production Technology and Heavy Machinery, Distribution and Electric Commerce, Automotive, and Business Services. LaPorte County has experienced some newly emerging clusters in Downstream Chemical Products, Metalworking Technology, and Upstream Chemical Products.

    Regional Economic Adjustment Problems and Economic Distress

    The LaPorte County area has been dependent upon durable goods manufacturing and within the past decade has suffered from the effects of the recession. A lack of any corporate headquarters has resulted in some manufacturers closing operations causing unemployment rates higher than the national rate. There is a decline in jobs of the core clusters due to foreign competition, globalization and the workforce is not skilled in the new emerging industry clusters. In addition, the population in LaPorte County is slowing decreasing largely due to an aging population. The diminishing number of younger individuals could have serious implications for the provision of services required by ever increasing older populations. Since 2010, the population age group zero through four decreased 0.91%, five through seventeen decreased 3.94%, eighteen through twenty-four increased 2.48%, twenty-five through forty-four decreased 1.49%, and sixty-five plus increased 10.51% according to information reported by STATS Indiana (

    A large automotive manufacturer closed in the early 2000’s which resulted in increased unemployment throughout LaPorte County. The economic recession of 2008 took its toll on LaPorte County as well. Within the County some of the older, urban areas experienced

    decay, vacant lots, empty stores, and closed businesses. As expected, this neighborhood blight results in depressed property values, low per-capita income, high unemployment, and poor infrastructure. There is no uniform inventory of underutilized properties within the County. There are three quasi-governmental entities focused on economic development in La Porte County—one in each of the Cities and one at the county-level. These groups work together in partnership and also compete at times.

    As a result, lenders are reluctant to participate in long-term fixed-asset financing for commercial and industrial purposes. This is especially true in the case of small and start-up businesses with little or no historical track record showing profits or potential of sustainability. The LaPorte County RLF will provide another source of funds, which will occupy second position, in order to leverage more commercial banks to provide loans. This will enable start-up businesses or job creating development and expansion projects to receive loans with reasonable interest rates and terms. Loans will act as an incentive for the banks to participate in various projects, and attract private lenders that would otherwise not participate.

    Plan to Deal with the Regional Economic Adjustment Problems and Economic Distress

    The intended purpose of the LaPorte County RLF is job retention and creation, particularly in the low- and moderate-income sector. The goal is to achieve this through loans for new or start-up businesses, business expansion, or to circumvent business closure. The LaPorte County RLF funding is most desired to assist in leveraging private investment back into the County. The LaPorte County RLF is a tool used to help support the overall goals of the CEDS within LaPorte County.

    The two major cities in LaPorte County, the City of Michigan City and the City of LaPorte, have focused on downtown revitalization to help attract both families and businesses to the area. While downtown businesses may not boast the highest employment numbers it does add to the revitalization goals of the two largest cities in the County. This will be taken into account with LaPorte County RLF applications.

    CARES Act Recovery Assistance

    EDA’s CARES Act Recovery Assistance is designed to provide a wide-range of financial assistance to communities and regions in order to respond to and recover from the impacts of the coronavirus pandemic. The funds will support the long-term recovery of communities and businesses that have been impacted by the coronavirus pandemic. The EDA CARES Act finds that the coronavirus pandemic constitutes a situation of unusual and compelling urgency, therefore EDA is providing certain flexibilities to recipients of EDA-funded Revolving Loan Fund (RLF) awards in light of the impact of the pandemic on small businesses, the increasing demand for RLF loans, and the need for RLFs to provide credit quickly and efficiently to communities. The coronavirus pandemic and accompanying shelter-in-place responses took a toll on local businesses. In many cases business owners are struggling to recover due to temporary closures, supply chain challenges, and increased expenses for

    employee and customer protection equipment and practices. The RLF addendum and administrative activity will help the LaPorte County lending area to prevent, prepare for, and respond to coronavirus and respond to economic injury as a result of coronavirus by the following:

    RLF: Supporting Economic Adjustment Activities/Strategies

    In order to assure that the LaPorte County RLF will be used to support specific economic adjustment activities identified in the CEDS, NIRPC staff and any support service rendered will ensure that as applicant reviews are underway the lending is in line with the regional efforts and strategies identified in the CEDS.


    The purpose of the business development strategy is to increase the capacity of the local economy by providing local businesses and private entities a financing source to grow, maintain and/or sustain their operations locally that will add value to the overall region.

    Specific objectives include:


    The LaPorte County RLF financing strategy is based on the sources of financing, both public and private, available to support the business development objectives discussed earlier in this plan and the differing needs of the types of business targeted for investment.

    Financing Needs

    The type of financing needs and opportunities for target businesses identified in the business development strategy include:


    This section discusses the specific policies designed to guide RLF financing, taking into consideration the need to manage and protect the RLF capital while accomplishing the objectives of the Business Development Strategy. The standard lending terms and any special financing techniques that the RLF may utilize are discussed below in detail. The financing policies below are consistent with EDA policies and requirements.

    Eligible Lending Area

    The eligible applicants proposed location of business must be within LaPorte County but is preferred to be within the city limits of Michigan City or LaPorte. The major goals of stabilizing the economy, diversifying the economy, and reducing unemployment will be taking place primarily in the two cities.

    Allowable Borrowers

    In order to be eligible, an applicant must meet the following eligibility requirements. The business can be either a private for-profit or non-profit firm, industry, corporation, partnership or sole proprietorship. The LaPorte County RLF does not limit the allowable sector that the business operates. All applicants will be required to certify that neither themselves, the business, nor any affiliated business have been suspended or debarred or voluntarily excluded from receiving funds of this program pursuant to 15 CFR 26.215,

    26.220 and/or 26.625.

    Allowable Lending Activities

    The allowable lending activities for the LaPorte County RLF program include:

    Credit Not Otherwise Available

    The LaPorte County RLF cannot be used to substitute for available private capital and potential borrowers must demonstrate that credit is not otherwise available. The borrower must demonstrate that financing for a project is not otherwise available on terms and conditions that would permit completion and/or successful operation or accomplishment of the project. LaPorte County RLF funds will not be disbursed until written evidence to this effect has been received. This would typically be in the form of a bank "turn-down" letter, or equivalent documentation, or letter indicating that the bank can only finance a portion of the money the borrower needs.


    The following is the targeted percentage breakdown of borrowers for the LaPorte County RLF program. It is anticipated that the breakdown of borrowers by percentage of dollar amount is as follows:

    Private Sector Leverage

    The LaPorte County RLF will follow the EDA required minimum ratio of two dollars in private investment for every one dollar of RLF loans as identified in 13 CFR 307.15(d). Private investment may include (1) capital invested by the borrower or others; (2) financing from private entities; and (3) 90% of the guaranteed portions of SBA 7(a) and SBA 504 debenture loans. Projects that provide higher private investment will receive consideration over those providing lower investment, all other factors (such as job creation) being equal.

    Job Cost Ratio

    The LaPorte County RLF’s target job/cost ratio is one job created or retained per every

    $25,000 of proceeds used. Applicants with a lower investment per job will be given priority over larger investments per job. The LaPorte County RLF will concentrate on creating family- wage employment, primarily for low- and moderate-income families. Skilled and semi-skilled jobs in light manufacturing will be viewed as those most desirable for long-term employment.


    The LaPorte County RLF loan selection will be based on the financing policies and portfolio standards discussed earlier in this document. However, proposed projects that can demonstrate the following criteria will take higher/priority when awarding loans:


The LaPorte County RLF will be evaluated on a semi-annual basis in conjunction with the reporting to the Economic Development Administration by the NIRPC staff. The only time changes in the plan will occur will be when a loan is made and or closes. A review of the loan portfolio will also be made available to the Loan Management Board at each meeting in which a loan is being discussed or issued.

Updates to the Management Plan

The LaPorte County RLF will update its management plan in accordance with 13 CFR 307.9. At a minimum the plan will be updated every five years. Notification will be given to the

Economic Development Administration of any changes made to the plan as well as any changes that affect the RLF. NIRPC can choose to update the LaPorte County RLF management plan sooner than every five years as they see fit.


This section serves as the LaPorte County RLF’s internal operating manual and will identify the administrative procedures for operating the RLF. All operating procedures will be consistent with the “Prudent Lending Practices,” as defined in 13 CFR 307.8. As NIRPC is the administer of the RLF funds, NIRPC will be responsible with complying, and ensuring that potential borrowers comply, with applicable laws and regulations including but not limited to 13 CFR Part 307.


    The LaPorte County RLF Program will be administered through NIRPC, a multi-county planning commission established under state law. NIRPC will administer the program in conjunction with LaPorte and Michigan City Economic Development Corporations. NIRPC does not employ loan processing staff so some services will be contracted.

    NIRPC is responsible for the following tasks either through staff or contracted services:


    Application Process

    Anyone desiring to participate in the program will be referred to contact NIRPC, or the designated contractor, to request assistance. An initial interview will be scheduled and the program will be explained along with the eligibility standards. An application will be given to the potential borrower as well as a contact person to work with. Multiple meetings may be required with any potential applicant in addition to on-site visits or field research.

    Eligibility Establishment

    As soon as the potential project is considered ineligible, then: (1) the potential applicant will be informed of the decision (via email, phone call or letter) and the reasons why: and/or (2) the potential applicant will be provided with information and changes needed in order to qualify for the program. In either case, the applicant is invited to resubmit a proposal if the revised proposal appears to meet requirements.

    Environmental Review

    The RLF Administrator with the assistance of appropriate staff, shall assess the significance of all environmental impacts of activities to be financed in compliance with the National Environmental Policy Act of 1969 and other Federal environmental mandates, as per the Assurances (SF 424D as revised) executed with the Economic Development

    Administration. No activity shall be financed which would result in a significant adverse environmental impact unless the impact is to be mitigated to the point of insignificance. When necessary to ensure compliance, any required mitigation shall be made part of the loan conditions.

    No project shall be approved which would result in the alteration of or have an adverse impact on any wetland without prior consultation with the U.S. Department of the Interior, Fish and Wildlife Service, and, if applicable, obtaining a section 404 permit from the Army Corps of Engineers.

    Consistent with E.O. 11988, no project shall be approved which would result in new above ground development in a 100-year flood plain. This determination will be made by reviewing the proposed development against FEMA Flood Insurance Rate Maps.

    The State Historic Preservation Officer, (SHPO) shall be notified of each loan proposal that involves significant new construction or expansion and asked to submit comments on the effect of the proposed activity on historic and archaeological resources. The RLF Administrator shall work with the SHPO and EDA in cases where the SHPO has recommended actions or has been determined an adverse impact.

    All loan applicants shall be requested to provide information indicating whether or not there was hazardous materials such as EPA listed (see 40 CFR 300), hazard substances, leaking

    underground storage tanks, asbestos, polychlorinated biphenyls (PCB), or other hazardous materials on site that have been improperly handled and have the potential of endangering public health. If deemed necessary, loan applicants may be required to perform or provide evidence of a Phase I site assessment to identify possible sources of contamination, a Phase II site assessment to test soil and/or groundwater samples, and a Phase III site remediation involving mitigation of applicable contaminants. In cases where there are unresolved site contamination issues, the RLF Administrator shall work with the loan applicant and the appropriate state environmental agency office to resolve these outstanding issues.

    Submittal Requirements from Each Applicant

    If the potential project is considered eligible, then the following information must be submitted to create the loan application package:

    Application Review and Credit/Financial Analysis

    NIRPC staff will analyze the application and accompanying information. Staff will also ensure that the LaPorte County RLF Managing Board reviews and approves loans in accordance with the approved financing policies, targeting criteria, and loan selection criteria of the RLF Plan. A credit analysis will be completed and included in with the application package for the Board. The complete package along with loan documents is submitted to legal counsel for review for reporting to the Board.

    Recommendations to the LaPorte County RLF Managing Board

    Once the complete application package is gathered and all eligibility requirements and Economic Development Administration regulations are met then a meeting of the LaPorte County RLF Managing Board will be scheduled. The complete application package along with the credit analysis and any additional information will be sent to the board for review prior to the meeting. The material will be discussed and the final decision for funding will be made. The board will determine the frequency and reporting requirements of financials and job creation. If the application is denied by the Board, a letter will be sent to the applicant stating the reasons for the denial and, where appropriate, suggestions will be made to the applicant on how to make it acceptable and an invitation will be issued to submit a revised application. If the application is approved then staff will proceed to the loan closing stage. Minutes of all Board meetings will be retained to document the approval/denial of loans. A quorum for a meeting will consist of a majority of the current Board Members present.

    Loan Closing Schedule, Fund and Close of Loan

    The loan documents that have been reviewed by legal counsel and approved by the Board are collected and a signing with the applicant(s) is scheduled, a check is disbursed and the loan is closed. The applicant, prior to receiving the loan check, is required to pay in full the

    $1,000 loan closing fee less the application fee. Confidentiality

    Confidentiality regarding financial information will be guarded at all times. No LaPorte County RLF Management Board member, NIRPC staff member or NIRPC contractor

    will use his or her official position or office to obtain financial gain for themselves other than salary and/or reimbursement of expenses, or for any member of his household or for any business with which he or a member of his household is associated. Further, no LaPorte County RLF Management Board member, NIRPC staff member or NIRPC

    contractor will further his personal interests through the use of confidential information gained in the course of, or by reason of, his official position or activities in any way. (Code of Ethics, RCW 42.123).

    Other Compliance Requirements

    Assurances of regulatory compliance will be obtained before any loan is disbursed. Compliance will be monitored during the payback period and, in a case of confirmed non- compliance, the loan may be called. Provisions will be made in the loan agreement to call the loan for non-compliance of any of the following items.

    Civil Rights: The LaPorte County RLF program will be marketed to reach as broad a spectrum of potential borrowers as possible. Staff will monitor borrower compliance, both pre- and post-loan, through discussion, requiring written assurances, reports on equal employment opportunity, and observation during periodic site visits.

    Flood Hazard Insurance: Loans are not made for project activity located in a flood plain unless proof of flood hazard insurance is provided.

    Davis-Bacon Requirements: Construction activity financed in whole or in part by the LaPorte County RLF must comply with the requirements of the Davis-Bacon Act, as amended.

    Access for the Handicapped: All LaPorte County RLF financed construction projects, to which the public will have access, will provide access to the handicapped in compliance with Public Law 90-480, as amended (42 U.S.C. 4151, et seq.) and the regulations issued thereunder, or those loans will not be approved.

    Contract Work Hours and Safety Standards and Anti-Kickback Act: Where applicable, LaPorte County RLF borrowers shall be required to comply with the Contract Work Hours and Safety Standards Act, as amended (40 U,S.C. 327-333) and with the anti-Kickback Acts, as amended (40 U.S.C. 276 (c); 18 U.S.C. 874).


    Commitment Letter (Credit Agreement): The applicant is advised of the loan approval including the terms and conditions set forth. A commitment letter shall indicate all reporting requirements necessary on behalf of the loan recipient.

    Loan Closing Documents

    Below is a minimum list of documents that will be required for the types of loans made under the RLF and any special timing requirements. Per 13 CFR 307.15(b) (2), the required documents should at a minimum include:


    NIRPC will closely monitor the performance of all loans within the loan portfolio in order to improve opportunities for both the repayment of loans and for the success of the borrower. Loan servicing will be performed by NIRPC or NIRPC’s hired contractor(s), with recommendations from the LaPorte County RLF Managing Board. All contracting and procurement completed by NIRPC is conducted pursuant to Federal procurement regulations. Staff will provide accounting and loan collection services and provide a financial report to the Board at meetings, including a statement of individual account status.

    A commercial bank will be selected as the depository of the loan funds. Included in the loan servicing and accounting are the following:


    NIRPC received the LaPorte County RLF grant in 1987 at which time the local share commitment from the City of Michigan City and the City of LaPorte were receipted into the account. Since then the local share and federal Economic Development

    Administration funds have been held in one separate fund by NIRPC. This has made it possible for NIRPC to ensure that the local share proportion to the federal funds is adequate for the grant.

    Accounting and Audits

    Since the LaPorte County RLF program is administered by NIRPC its existing policies and procedures apply to this program. The financial statements of NIRPC are prepared annually in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Every year NIRPC receives a federal audit in compliance with the federal regulations annually by the Indiana State Board of Accounts. As the LaPorte County RLF funds are part of NIRPC’s financials they are included in the audit and are reported in compliance with the RLF Standard Terms and Conditions Part I.F.

    The LaPorte County RLF has its own separate fund, and bank account, within the NIRPC accounting system and all loans are tracked separately within that fund. Program income is defined as interest earned on outstanding loan principal, interest earned on accounts holding RLF funds not needed for immediate lending, all loan fees and loan-related charges received from borrowers.

    Administrative Costs

    NIRPC intends to use the LaPorte County RLF income to cover eligible administrative costs associated with the grant. The anticipated maximum percentage of income to be used for expenses will be in compliance with EDA’s Allowable Cash Percentage. NIRPC will apply, track, and report the administrative costs in compliance with 13 CFR 307.

    Economic Development Administration Reporting

    NIRPC will comply with all EDA reporting requirements. As part of this reporting NIRPC will certify to EDA that the Regional RLF is operating in accordance with the applicable Regional RLF Management Plan.

    Allowable Cash Percentage

    Effective Jan. 2, 2018, EDA replaced the Capital Utilization Rate of 25 percent with region- specific Allowable Cash Percentage (ACP) that is updated annually. The ACP is the average cash available for RLFs in the Chicago EDA region and is used for risk rating RLFs according to the Risk Analysis System.

    Lending activity will be managed so that the cash available for lending is less than the current ACP in effect for the Chicago Region. However, if the Cash Available for Lending is greater than 50% of the RLF Capital Base for 24 consecutive months, EDA may take action to disallow the persistent excess cash.


    NIRPC is required to obtain an annual audit of its RLF program in accordance with 2 CFR Subpart F and the Compliance Supplement, which is appendix XI to 2 CFR part 200, as applicable.


During the period of May 7, 2020 to May 6, 2021, EDA is issuing a variance to the three regulations governing RLF awards that: