ACTION REQUESTED:
Title
Communication from the City Manager with a Request to APPROVE a LOAN from the City’s Revolving Loan Funds to SUDHEER AND RAJANI SAJJA (PRINGLE TECHNOLOGIES), in the Amount of $350,000.00, and to Authorize the City Manager to Execute the Necessary Documents.
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BACKGROUND: Sudheer and Rajani Sajja, owners of Pringle Technologies Inc., are seeking to purchase 47 acres of Industrial zoned land (I-1) and lease the facilities located on the property to Pringle Technologies Inc.
Pringle Technologies Inc. currently employs 129 world-wide, 18 in Peoria, and 10 more in the USA. They will occupy 6,000 sf of office and 10,900 sf of warehousing among three buildings in "As Is" condition. Please see Exhibit A for details on the property. It is believed the existing facilities should provide operational growth for Pringle Technologies Inc. up to the end of 2022. When the business outgrows the available space, Pringle will be able to build a new office, assembly, and warehouse facilities within the 47-acre parcel.
Company Background
Pringle Technologies Inc. was incorporated on August 30, 2004 and is 100% owned by Rajani Sajja with Sudheer Sajja serving as the CEO. Pringle Technologies Inc is a software development company that provide digital platforms that streamlines and integrates the following functions/operations for their clients: a) website, b) ecommerce and product catalogs, c) point of sale systems, d) credit card processing, e) social media integration, and f) call center services. The Pringle Technologies Inc. platforms mainly serve the restaurant industry, but their product/service lines extend to other industries including logistics, education, retail, and non-profits.
Key product/service lines and revenue streams include a) Pringle Pay, b) Pringle-Card Point, c) Smart Kitchen, d) e-Agent, and e) Software subscription. An innovative product/service line Pringle Robotics has emerged.
Pringle Robotics Inc is an innovative product/service that deploys autonomous robots with IoT capabilities and provides solutions for multiple industries that include restaurants, hospitality, schools, healthcare, and retail. The various BoTs self-navigate through facilities and provide a) disinfection and sanitization solutions (Productor & Flash) b) hosting and advertising (Ketty), c) bussing/delivery service of food, concessions, and other items (Bella). Due to its growth potential, Pringle Robotics Inc was incorporated in April of 2022 as a separate company.
Financing Structure and Terms
The Sajja’ capital investment includes $1,650,000 to purchase the 47-acre parcel along with the facilities on site for $1,450,000 and $200,0000 for working capital.
The loan was reviewed by the Loan Review Panel and recommended for approval according to the Memo of May 12, 2022 (attached). The general terms and conditions of the loans are:
• EDA RLF Loan Terms - An EDA RLF loan in the amount of $250,000 at an interest rate of 4% for a term of 10 years with an additional 10-year option per Council approval, amortized over 20 years. The loan will be disbursed in full, conditional upon receiving private bank financing at time of closing of the real estate purchase.
• EDA RLF CARES Loan Terms - A loan of $100,000 at a rate of 3% for term of 10 years, amortized over 10 years to be used for working capital. The loan will be disbursed in full subject to private financing at time of closing of the real estate purchase.
• Collateral Requirements - The loan will be secured with four real estate properties owned by the Sajja’s and Pringle Technologies Inc as itemized in the Memo (attached).
• Conditions - It was noted and understood the City loan is conditioned on securing other sources of funds as shown in the table below.
The following is a breakdown of Sources and Uses of funds for the project:
RLF Program Background
The City has two Revolving Loan (RLF) Fund Programs originating from the Economic Development Administration (EDA). One is the EDA RLF Program the other is the EDA CARES RLF Program. Both programs are detailed a summarized in Exhibit B.
The EDA RLF Program was initially capitalized in 1988 with $769,232 by an Economic Development Administration (EDA) grant of $500,000 and matching funds from the City of $269,232. As of December 31, 2021, the capital base has grown to $1.30 million through added income/interest ($966,216) minus losses/expenses ($436,313). In total the program has loaned over $4.9 million to 48 different projects in the industrial, commercial, and service industries and has assisted with the creation/attraction of 2,127 jobs. As of May 1, 2022, a balance of approximated $402, 000 is available for lending.
The EDA CARES RLF Program originated in July of 2020 via a $1.29 million grant award to the City to make capital available to business operating under COVID. As of December 31, 2021, the capital base has grown to $1.30 million through added income/interest. In total the program has loaned over $900,000 to 18 different projects in the commercial and service industries and has assisted with the creation/attraction of 36 jobs. As of May 1, 2022, a balance of nearly $297, 000 is available for lending.
FINANCIAL IMPACT: If approved, the City would disburse $250,000 from the EDA RLF Fund, and the remaining balance for new loans would be $152,000. In addition, the City would disburse $100,000 from the EDA RLF CARES Fund, and the remaining balance for new loans would be nearly $197,000. After the disbursement there would be $349,000 available for new loans available from both lending pools.
NEIGHBORHOOD CONCERNS: Not applicable
IMPACT IF APPROVED: The City would support the retention of 18 jobs and the future job growth potential of Pringle Technologies and Pringle Robotics.
IMPACT IF DENIED: A financial gap of $350,000 would continue and the project would either be scaled back, the project would be delayed; and/or additional equity/debt would need to be raised.
ALTERNATIVES: None
EEO CERTIFICATION NUMBER: Not applicable.
DEPARTMENT: City Manager's Office