May 2008 Archive

The Board of Directors of the Finance Authority of Maine (FAME) has approved two programs to aid Maine businesses in certain designated disaster areas that have been negatively affected by recent excessive rain, snow melt, and flooding.  Effective immediately, FAME will provide lower cost financing to affected businesses through its direct loan and commercial loan insurance programs. 

Governor John E. Baldacci announced the FAME assistance yesterday while touring affected areas in Aroostook County and New Brunswick with New Brunswick Premier Shawn Graham.

"Our goal is to help businesses and families get back on their feet and to get quickly to work on recovery,” Governor Baldacci said.

FAME Board Chair Joyce Maker stated:  “We are pleased to assist Maine businesses, primarily those located in Aroostook County, during this difficult time as they strive to recover from the recent, unfortunate storm and flooding.”  

FAME will offer both direct loans and loan insurance to eligible businesses adversely affected by the recent storm.  To be eligible for assistance, a business must, among other things, be Maine-based and located within an area covered by the Governor’s State of Emergency Declaration dated April 29, 2008, or in any additional areas subsequently designated by the Federal Emergency Management Agency (FEMA).

First, FAME will offer direct loans through its Economic Recovery Loan Program.  FAME is reducing its usual interest rate from Prime (currently 5%) to 2% below Prime on one-year loans of $75,000 or less (no principal repayment in the first year). 

Second, FAME will make available enhanced Commercial Loan Insurance both in the traditional manner and also via its innovative OnLine Answer (OLA) Program.  "OLA is a faster, easier, and lower cost way for lenders to apply for loan insurance,” stated FAME Acting CEO Beth Bordowitz.  “A lender simply completes an application on FAME’s Web site and receives a decision and all required FAME paperwork within minutes,” Bordowitz noted. 

Typically, the OLA Program provides lenders with up to 60% pro-rata loan insurance, up to a maximum FAME exposure of $250,000.  Through June 30, 2008, however, FAME will increase the insured percentage to 75% on loans of $100,000 or less to affected businesses.  Also, the normal 1% initial insurance fee will be reduced to ½%, and the terms of these loans will be restricted to a maximum of six months.  A financial institution must sign up with FAME in order to participate in the OLA Program.

"Through these two flexible options, FAME is doing its part to assist Maine businesses as they cope with the challenges wrought by the recent storm,” stated Bordowitz.

Each of the FAME flood disaster assistance programs will require the following:

1.   The Borrower must have a place of business located in a Maine community within the state or federally-designated disaster area;

• The Borrower must have been directly affected by rising water associated with the April 2008 rainstorms and have sustained losses due to the rising water;
• The Borrower must provide a pledge of any applicable insurance proceeds and a binding commitment to:  (a) diligently pursue applicable insurance claims; (b) diligently pursue SBA disaster loan funds for any losses not covered by insurance; and (c) immediately upon receipt thereof, use any and all proceeds of applicable insurance and SBA disaster loans toward payoff of the FAME direct or insured loan.

Finally, FAME is partnering with Northern Maine Development Commission (NMDC) to facilitate the application and origination of loans.  The two agencies will work together to provide enhanced efficiencies, flexibility, and swift response time.

"We are happy to be partnering with FAME to ensure that Northern Maine businesses obtain the swift assistance they need to recover from this storm,” stated Duane Walton, Director of Business Finance at NMDC.