Mechanicsburg Commercial Rehabilitation Loan Program

​The Mechanicsburg Commercial Rehabilitation Loan Program offers property owners—often working in conjunction with their business tenants—located on sections of Main or Markets Sts. low-interest financing for projects designed to improve their properties and thus the downtown building inventory. Financing can be obtained to purchase or improve properties, for systems, fixtures or furnishings or for site improvements.

This program is often used in conjunction with others programs and incentives offered in the county and by the Downtown Mechanicsburg Partnership as well as through our valued partners including local, state and federal government agencies and private lending institutions.

No application is accepted without an initial interview with the Redevelopment Authority’s Downtown Coordinator Rebecca Yearick to discuss the merits of the candidate project and its impact on Downtown Mechanicsburg. Applicants are encouraged to involve the Redevelopment Authority early in their plans to identify a property, purchase or lease and open their business or make improvements as funding is limited and commitments to worthy projects may be made well before financing is requested or obligated. Applications are taken before the borough’s Loan Committee and which determines if they should be recommended to borough council for financing of up to $40,000.

1. Identification

   The program shall be known as the Mechanicsburg Commercial Rehabilitation Loan Program.

2. Program Area

   The loan fund shall consider applications for properties located on Main Street between Walnut and York Streets and on Market Street between Allen and Simpson Streets.

3. Eligibility

   • Eligible applicants are retail or commercial offices, businesses or private non-profit corporations. Units of local, state or federal governments are not eligible.
   • The business or non-profit corporation must do business in the program area described above and have an acceptable credit rating.
   • Acquisition, new construction, rehabilitation and site improvement items are eligible. Rental residential units in the same property may also be addressed if at least 50% of the loan amount is attributable to the commercial space.

     • Acquisition – Defined as the acquisition of a property where the majority of the total square footage on the first floor of the subject property is vacant or about to become vacant and a retail or commercial tenant has been committed to occupy the space. In addition, an acquisition loan may be made if the borrower proposes to convert first floor space to a commercial or retail use.
     • Rehabilitation – Defined as interior and exterior repair, upgrading, reconstruction or restoration. Eligible rehabilitation items may include, but are not limited to, new fixtures, new exterior signs, new floor, wall and ceiling covering, new interior lighting, new public restrooms as well as major systems upgrading (electrical, plumbing, heating, air conditioning, roof).
     • New Construction – Defined as building additions.
     • Site Improvements – Defined as exterior improvements to property not connected to building. Eligible site improvement items include, but are not limited to, landscaping, sidewalk and curb repair, reconstruction, parking lot resurfacing and exterior lighting.

4. Loan Amounts – Rehabilitation, new construction and site improvement projects.

   • The maximum loan amount available to eligible applicants shall be 75% of the total eligible cost (rehabilitation, new construction and site improvements) or $40,000, whichever is less.

     • In no case shall the commercial rehabilitation loan and senior liens exceed 80% of the appraised value of the property.
     • In the event that a property is purchased in a cash sale, the loan amount shall not exceed 25% of the purchase price if the loan application is made within twelve month of the closing on the property.

   • The interest rate on the loans shall be 3%. The loan shall be amortized over a 15-year period with a balloon payment after 10 years.
   • To qualify for an acquisition loan, the proposed rehabilitation or restoration cost must be at least 20% of the acquisition cost.
   • All loans shall be reviewed by the Loan Review Committee and approved by Borough Council. A mortgage shall be placed on the property in the amount of the low-interest loan for the term of the loan. Said loan may be subordinate to a first lien holder only. In the case of a property being purchased on a sales agreement, a personal guarantee shall be required and personally owned property may be encumbered.

5. Appraisal

   Prior to approval of a loan, the Loan Review Committee shall request an appraisal which has been prepared within one year of the Commercial Revitalization Loan application by an appraiser with general certification credentials. An appraisal is not required if the applicant meets the criteria outlined under 4.a.2 for properties purchased in a cash sale.

6. Making Application

   Marketing the program, the Redevelopment Authority will identify, meet with and interview prospective applicants to determine their and the project’s eligibility and assist them in assembling and submitting their application to the Authority. This will include, but not be limited to, photographing existing conditions, gathering and verifying contractor or supplier estimates and approaches for the work, developing narratives for all aspects of the project (including that portion of the project which is not part of financing) and its impact on the business as well as downtown. The Redevelopment Authority will also run credit reports, research the applicable business and owner financials, as well as those related to the property and prepare project financials and other materials in order to provide the Loan Review Committee with a thorough understanding of and description of the applicant’s request and project(s) for financing. Based on the guidelines and that knowledge of the business, property, owner(s) and the downtown, the Redevelopment Authority may offer suggestions as to the worthiness of the candidate application.

7. Availability of Loan Funds and Project Monitoring

   Loan funds will be provided to the borrower at closing. The Redevelopment Authority receives the monthly loan payments from the borrower and administers all loan program accounts. The Redevelopment Authority monitors the project to assure that the loan funds are being utilized as proposed by the applicant and as specified in the loan documents. Site visits are conducted and photographs are taken of the project(s). The borrower agrees to permit the project to be promoted in marketing materials that showcase program outcomes.

8. Program Priorities

   Applicants who have not received a loan through this program previously shall be given preference.

9. Loan Documents

   The borrower shall sign a note and a mortgage.

Downloads

• Mechanicsburg Commercial Rehabilitation Loan Program Application