Maine Forestry Direct Link Loan Program

Mechanics of the Maine Forestry Direct Link Loan Program

This program uses the linked deposit financing mechanism to encourage forestry BMPs. The steps a logging operation must follow to obtain a linked deposit loan are outlined below:

• The primary business of the Applicant must be logging in Maine.
• The Applicant must be a current Master Logger (ML), Certified Logging Professional (CLP), or Qualified Logging Professional (QLP), and enter into an agreement for the term of the loan with MFS to:
  • Acknowledge that failure to maintain certification by ML, CLP, or QLP will result in cancellation of the agreement thus converting the reduced interest rate to a standard interest rate.
• Maintain, on file, a Harvest Operations Plan (HOP) including HOP standards specified in the document titled “HOP Standards for Direct Link Loan.” This must be retained for the term of the loan and available for review by MFS upon request.
• Allow spot checks of its work by MFS and implement principles and practices described within MFS BMP manual “Best Management Practices for Forestry: Protecting Maine’s Water Quality”.
• Acknowledge that 3 findings of non-adherence to BMPs will result in cancellation of the agreement thus converting the reduced interest rate to a standard interest rate.
• Acknowledge that enforcement action by federal, state, or local regulatory body for violations of the State's forest practices or water quality protection laws related to forest management will result in cancellation of the agreement thus converting the reduced interest rate to a standard interest rate.
• Keep equipment purchased operating in Maine throughout the term of the loan. Failure to do so will result in cancellation of the agreement thus converting the reduced interest rate to a standard interest rate.
• Upon execution of this agreement, the Applicant can request a Certificate of Qualification from MFS.

• The Applicant obtains a Certificate of Qualification from the MFS identifying the equipment that is eligible for Maine Forestry Direct Link Loan Program funding.
• The Applicant applies for a loan from one of the banks participating in the Maine Forestry Direct Link Loan Program.
• After the Applicant presents the Certificate of Qualification, the bank evaluates the credit-worthiness of the Applicant using its normal loan criteria. If these criteria are met, the bank then enters into a loan agreement with the Applicant.
• Upon approval, ME DEP and the MMBB deposit with the bank, through a certificate of deposit, funds equal to the face value of the loan to the Applicant. The term of the deposit is equal to the term of the bank’s loan with the logging operation, but in no case is longer than 5 years.
• The interest rate on the certificate of deposit is discounted below the bank’s normal cost of funds, as determined by a comparison to the interest rates of U.S. Treasury notes and bonds. The bank’s repayment schedule in the certificate of deposit contains annual payments of principal and interest to the Maine Municipal Bond Bank.
• The interest rate of the bank’s loan to the Applicant is reduced at a discount the bank received from the Maine Forestry Direct Link Loan.

With an interest rate subsidy of up to 2%, eligible borrowers may apply up to a maximum loan amount of $800,000