FAME makes it easy for financial institutions to apply and be approved for pro-rata and leveraged insurance. Using OnLine Answer (OLA), which is a secure web application, lenders can apply for loan insurance online by entering a limited amount of data to receive a decision in seconds. OLA is provided by FAME to financial institutions that have signed both the master Loan Insurance Agreement and the Addendum to Loan Insurance Agreement with FAME. For commercial loan insurance (CLI) over $750,000, FAME provides a traditional application process.
Pro-rata and leveraged insurance for term loans are available in one-, three-, and five-year fee options. Pro-rata and leveraged insurance for line of credit loans are available in one- and three-year fee options.
Any business or project for any such business that is located in the state of Maine is eligible, except for businesses or uses as follows:
- Religious or fraternal organizations;
- Gambling or adult entertainment facilities;
- Residential housing;
- Investment real estate (50% or more non-owner occupied);
- Personal, family or household expenses.
Insurance Available Maximum
- Pro-rata term and line of credit loans:
- 75% maximum insurance up to $500,000 FAME exposure.
- 60% maximum insurance for FAME exposure between $500,001 and $750,000.*
- 60% maximum insurance for start-ups (businesses open less than one year) up to $500,000 FAME exposure.
- Use of projections in cash flow analysis limits availability to $500,000 FAME exposure.
- Pro-rata refinance of existing debt: 40% insurance on up to $500,000 FAME exposure. See Guidelines for Refinancing Existing Debt. (Leveraged Insurance is not available for refinancing existing debt.)
- Leveraged term loans: Up to 25% insurance on up to $250,000 FAME exposure.
- Leveraged lines of credit loans: Up to 20% insurance on up to $250,000 FAME exposure.
FAME’s aggregate exposure per related entity (borrower/guarantor) in OLA is $750,000. This can be a combination of pro-rata and leveraged insurance with a $250,000 limit on leveraged insurance.
*Note: If a second loan insurance request is submitted within 90 days of a prior application, which would result in aggregate FAME loan insurance exposure over $500,000, then the later application will be pended and a FAME loan officer will reach out to the lender. The lender can chose from two options if this occurs: 1) Both loans could be insured for up to 60% FAME exposure; or 2) The first loan could remain at 75% FAME exposure and the second loan would have a blended rate so that FAME’s overall exposure does not exceed a combined 60%.
Interest Rate and Term
Determined by lender. (Term should not exceed useful life of assets financed or serving as collateral.)
All types of collateral are eligible, subject to review and acceptance by FAME. Loans predominantly secured by accounts receivable and/or inventory require first-priority lien on said assets.
Any individual or entity that owns 20% or more of the borrower, or owns 5% or more of the borrower and receives substantial income from the borrower must guarantee the loan. All loans shall be guaranteed by owners of at least 51% of the borrower in aggregate, except for nonprofit borrowers and borrowers owned by 20 or more shareholders. Exceptions to this policy must be approved by the FAME board.
|Loan Insurance Programs||FAME Exposure Amount||Commitment Fee||Annual Insurance Fee||3-Year Insurance Fee*||5-Year Insurance Fee*|
|OLA Leveraged Term||≤ $250M||0.5%||2%||5.75%||7.95%|
|OLA Leveraged Line||≤ $250M||0.5%||2%||5.75%||N/A|
|OLA Pro-Rata Term||≤ $750M||0.5%||1%||2.75%||3.95%|
|OLA Pro-Rata Line||≤ $750M||0.5%||1%||2.75%||N/A|
|Leveraged Term||≤ $1MM||1%||2%||5.75%||7.95%|
|Leveraged Line||< $1MM||1%||2%||5.75%||N/A|
|Leveraged Term||> $1MM||1%||2.5%||7.25%||9.95%|
|Pro-Rata Term||< $1MM||1%||1%||2.75%||3.95%|
|Pro-Rata Line||≤ $1MM||1%||1%||2.75%||N/A|
|Pro-Rata Term||≥ $1MM||1%**||1.25%||3.50%||4.95%|
*Once the multi-year term is over, the insurance will automatically continue on an annual basis unless the insurance is canceled or the lender reapplies for an additional multi-year term.
**There is an application fee of 1% of the FAME insurance being requested, due with the loan application for loans equal to or more than $1,000,000. This fee is partially refundable in the case of denial, but only after the cost of FAME’s due diligence is deducted. If the loan commitment is approved and accepted the application fee may be applied to the commitment fee.
Underwriting of OLA loans is done by a computerized scoring system, based on the information provided in the application process. The formula considers: global cash flow, collateral coverage, credit score, and public benefit, all as determined by FAME.
Special Credit Considerations – Refinancing Existing Debt, Floor Plans, Construction Loans
Loan insurance for refinancing of seller debt, floor plan lending and construction lending has special credit considerations and limitations. Please contact a FAME commercial loan officer for additional details.
- Environmental Questionnaire: if business real estate is collateral (to be kept in lender’s file.)
- Employment Plan: if business currently has more than 10 employees (to be submitted to FAME with insurance authorization and premium after approval).
The documents above can be viewed using Adobe Acrobat. You may download a free copy of Adobe Acrobat Reader by clicking here.
The applications are in a PDF format, which can be completed on-line and must be printed and sent to FAME.