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  • Participation Lending

    Terms

    • Maximum WHEDA Participation Rate of Less Than 50%
    • Maximum WHEDA Loan Amount of $2 Million
    • Maximum Term: 10 Years For Fixed Assets, 15 Years For Real Estate (Target Less than 7 Years)
    • Maximum Combined LTV: 85%

    Fees

    • Nonrefundable $250 Application Fee (Credit Toward Origination Fee at Closing if Approved)
    • Origination Fee and Interest Rate: Varies with Risk, Structure, and Complexity of Transaction

    How to Use the PLP

    Click here for PLP Forms & Manual.

    WHEDA Participation Lending Program Underwriting

    How is an application underwritten?

    • The underwriting process begins when the Participating Lender provides WHEDA with all documentation and materials listed in the Loan Checklist, together with a nonrefundable application fee of $250. 
    • WHEDA reviews the Participating Lender’s application package. The business will be evaluated against WHEDA's credit criteria to determine the risk associated with the transaction. During this process, a site visit may be performed by WHEDA. 
    • WHEDA underwrites the loan participation request against standard underwriting criteria to assure a consistent and objective process. Underwriting is also subject to a quantitative risk rating system used both in evaluating credit criteria and in establishing risk-based pricing.

    Priority Considerations

    WHEDA will give priority to economic development projects which:

    • Maintain or increase employment in Wisconsin
    • Will be located in an area of high unemployment or low average income
    • Provide services or activities that would otherwise not be available in the community or in Wisconsin
    • Are more than 50% owned by women or minorities
    • Have current gross annual sales of $5,000,000 or less or that employ 250 or fewer people
    • For new businesses, have less than 50% of their ownership held or controlled by another business and have their principal business operations in this state
    • Have multiple financial institutions or other financing sources participating in the economic development project

    What happens when WHEDA makes a decision?

    When WHEDA approves a participation loan, a Loan Commitment Letter will be sent to the Participating Lender outlining the specific terms of WHEDA’s participation, including disclosure of the origination fee, expected closing date, and other contingencies. The Loan Commitment Letter must be signed and returned to WHEDA with one-half of the loan origination fee within thirty (30) days of the date of the Letter. WHEDA reserves the right to withdraw the commitment if the Letter and fee are not returned on a timely basis.

    If the Participating Lender or borrower seek to modify any terms or conditions of the Loan Commitment Letter, a written request must be made prior to closing. WHEDA will consider the request, but may require additional information and/or seek the approval of one or more loan committees.

    If WHEDA denies a participation loan, written notification will be provided to the Participating Lender. The notification will clearly provide the basis for the decision. WHEDA will reconsider its decision within thirty (30) days of the original decision if information can be furnished by the Participating Lender and/or borrower that materially affects the original application and supporting materials.

    Eligible Uses of Loan Proceeds

    • Land purchase
    • Facility purchase or construction (office, plant, production facilities, etc.)
    • Equipment
    • Long-term (permanent) working capital
    • Equipment, materials and labor employed in improvements to commercial facilities that result in energy conservation
    • Facilities for the production, packaging, processing or distribution of raw agricultural commodities.

    WHEDA Participating Lender Program Servicing

    How are approved participation loans serviced?

    Arrangements for servicing of the loan will be made during the underwriting process. When WHEDA approves a participation loan, a Participation Agreement will be signed by both WHEDA and the Participating Lender providing the terms under which the loan will be serviced.

    Servicing continues until the loan is paid in full or, in cases of default or nonperformance, until all workout and collateral options have been exhausted. The Servicer is responsible for monitoring the loan, collecting and applying payments, and ensuring collateral preservation.

    Specific requirements relative to remittance of payment to either WHEDA or the Participating Lender, notification, access to files, and delinquency/default procedures will be negotiated and contained in the Participation Agreement.

    What types of responsibilities will normally be part of the participation agreement?

    • Generally, the following tasks will be required of the Servicer under a Participation Agreement:
    • Creating and maintaining a loan file for each loan.
    • Creating, properly completing, and maintaining all loan documents.
    • Keeping written records of loan servicing activities including:  repayment records, financial reviews, site visits and inspections, and conversations and correspondence with Borrower and Participating Lenders.
    • Maintaining valid and current security including, but not limited to, timely UCC filings, continuous insurance coverage and payment of real estate taxes, if applicable.
    • Collecting payments and appropriately applying to principal and interest and other obligations under the Note.
    • Monitoring construction draws, if any, including verification through physical inspections that the applicable work has been completed prior to distribution of the funds.
    • Receiving, analyzing, and forwarding to the parties listed on the Participation Agreement financial statements according to the terms of the Loan Document(s). 
    • Following up on all loan exceptions (i.e., covenant defaults).
    • Monitoring the loan for actual and potential default occurrences.
    • Reviewing and complying with terms of the loan documents on a continuous basis.
    • Collecting employment data from the borrower within 12 months after the project is completed or 2 years after a loan is issued to finance the project, whichever is sooner.

    This list is not intended to be comprehensive and other tasks and responsibilities may be enumerated in the Participation Agreement.