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The RMDZ Loan Program provides direct loans to businesses and nonprofits
that are located in a Recycling Market Development Zone. The purpose of
these loans is to promote market development for waste materials.
Eligible projects must increase diversion of
nonhazardous solid waste from California landfills and must also incorporate
one of the three following points:
- Result in a meaningful net reduction in the amount of solid waste
created from the production of a product.
- Produce a new product from a finished product that has served its
useful life.
- Manufacture with recycled materials or produce a recycled material
that can be used as a raw material in manufacturing.
For examples of qualifying businesses that have successfully used the
RMDZ program, visit the RecycleStore or
search our database.
Below are some frequently asked
questions (and answers), grouped by the following topics:
Who can apply?
Eligible applicants are businesses and not-for-profit organizations.
Where must the project be located?
The primary business/manufacturing location, or mobile part of business,
must be within a Recycling Market Development Zone (RMDZ).
Determine if your project is located in an RMDZ.
What if the borrower or project is not located within an RMDZ?
The borrower may qualify for a California Capital Access Program (CalCAP) loan and have the
borrower’s loan loss premium paid by the California Integrated Waste
Management Board.
What projects are eligible?
Eligible projects must result in the annual diversion of nonhazardous solid
waste from California landfills. For examples of projects funded
search our database.
What are the advantages of an RMDZ loan compared to a bank loan?
- More willing to lend to recycling manufacturers, especially
start-ups and expanding companies.
- Free technical assistance.
- Low cost to obtain a loan.
- Below-market interest rate.
- Fixed interest rate.
- No prepayment penalty cost.
What is the maximum loan amount?
The program can fund a maximum of 75 percent of costs directly attributed to
an eligible project up to a maximum of $2 million whichever is less.
Can a borrower or related entity obtain more than one RMDZ loan?
A borrower may apply for subsequent loans for business expansion that result
in additional diversion using the same or different type of feedstock,
manufacturing process, or end product. However, a borrower may not have more
than $3 million total principal outstanding on all RMDZ loans including
loans to related entities at any one time.
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Use of Loan Funds
What can loan funds be used for?
The primary purpose of the loan is to assist recycling businesses
financially for start-up operations or expansion projects, which will result
in new or additional diversion of nonhazardous solid waste from California
landfills. Businesses and
nonprofit organizations may use the funds for:
- Purchase of machinery and equipment.
- Working capital.
- Real estate purchase (maximum of $1 million).
- Real estate improvements.
- Refinancing of onerous debt (debt with high interest rates and/or
short terms) that jeopardizes and causes a negative impact on the
borrower's cash flow.
- Pay loan-closing points.
What are ineligible uses of loan funds?
- Research and development.
- Demonstration projects.
- Pay or reimburse business owners or investors.
- Business expenses incurred before final Board approval.
- Matching funds for Board grant programs.
- Expenses related to hazardous wastes.
What is the term or length of a loan?
The term of a loan should relate to the expected remaining useful life of
the collateral. Typical examples of loan terms are:
- Used Equipment = 5 years.
- New Equipment = 7 years.
- Partially secured by real estate = 10 years.
- Wholly secured by real estate = 15 years.
Can residential real estate be used as collateral?
A borrower's primary residence cannot be used as
collateral for an RMDZ loan.
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- Loan application is complete.
- Applicant is organized and licensed to conduct business in
California.
- Business plan is thorough with verifiable financial projections.
- All final permits to operate have been obtained and provided to the Board before
final loan approval.
- Documentation has been provided, such as contracts, verifying an
adequate supply of feedstock.
- Manufacturing equipment is proven technology that has been tested
and certified for environmental emissions.
- Documentation has been provided, such as contracts, verifying buyers
for the products that support the project’s financial projections.
- Applicant has provided documentation verifying the receipt of
matching funds to pay for all project costs.
- Business owners are willing to personally guarantee the loan.
How long does it take to process a loan and get the funds?
Application processing takes approximately 60 to 120 days, depending on the
complexity of the project and completeness of the loan application.
What is the loan application fee?
The loan application fee is $300, due and payable upon the submission
of an RMDZ loan application.
What is the cost of loan closing points?
The cost of loan closing points shall be .5 percent of the loan amount,
collected at the time the loan funds are disbursed into escrow. RMDZ loan
proceeds may be used to pay the points.
What is the interest rate?
The RMDZ loan interest rate may be adjusted semiannually after the State
Controller's office announces the Surplus Money Investment Fund (SMIF) rate
in January and July of each year. The current RMDZ loan interest rate is
posted on the RMDZ home page (Program News).
What other costs are applicants asked to pay for?
Expenses such as appraisals, real estate title policies, environmental
reports, escrow, and other out of-office costs required to processing a loan
application.
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To request a loan application or to discuss your
project, please contact:
California Integrated Waste Management Board
RMDZ Loan Program (Mail Stop 9)
P. O. Box 4025
Sacramento, CA 95812-4025
Phone: (916) 341-6227
Fax: (916) 341-6529
loans@ciwmb.ca.gov
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