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On occasion, the IRF may extend financing to a non-profit if it is determined the <br />loan would benefit the community along with retaining or creatingjobs. <br />2. Local Capital Market <br />2.1. Private financing institutions <br />Private financial institutions are primarily banks. These are not asset -based <br />lenders but, rather, lenders who inake loans based on the company's ability to <br />repay through profits and cash flow. <br />There are some ad hoe as well as more formalized groups providing angel type <br />financing, In order to fill our technology parks this void will have to be <br />addressed either by the private or public financing institutions. <br />2.2. Public financing institutions <br />A local certified development corporation (the Business Development <br />Corporation). This financing entity often meets the financing needs of area <br />businesses (average loan size is $450,000) utilizing the SBA 504 loan program. <br />2.3. Role of public and private lenders <br />Private conventional lenders prefer to tend to applicants with a good credit history, <br />strong historical cash flows and sound collateral coverage, which requires a larger <br />equity injection than many borrowers are able to meet, Private landers also avoid <br />smaller loans due to high transaction costs in relation to the risk and return, making <br />an exception for their good deposit applicants with whom they have strong <br />relationships. <br />Public lenders are willing to meet the credit needs of higher risk but creditworthy <br />businesses not entirely served by private lenders. Lower interest rates and longer <br />terms improve a borrower's cash flow. Moreover, public lenders help entrepreneurs <br />by lending in partnership with a bank so that the overall cost to the borrower is <br />reduced and a long-term relationship with a private bank is established. <br />When viewed from access to the capital market, the local business efforts are driven <br />by two very significant but very different needs: <br />To support the transition of our traditional manufacturing base, ensuring that those <br />activities that can continue to effectively operate in the US (and the Midwest in <br />particular) have the support and resources needed to succeed. While this sector is <br />recognized to be in a contractive mode, it continues to represent and will always be <br />a significant portion of our economy and a significant employer of our citizens. <br />10 <br />