California Department of Resources Recycling and Recovery (CalRecycle) 

Recycling Market Development Zones (RMDZ) Loans

Notice of Funds Available: Recycling Market Development Zone Loan Program--Fiscal Year 2017-18 (Cycle 25)

Program News...
  • Available Funds: $7,945,000 (estimated) as of October 6, 2017.
  • Interest Rate: 4.0%
  • For updates, send an email to Loans@CalRecycle.ca.gov

The Department of Resources Recycling, and Recovery (CalRecycle) offers the Recycling Market Development Zone Loan Program pursuant to Public Resources Code sections 42010-42024. The purpose of this loan program is to conduct individual market development activities that strengthen demand by manufacturers for the recyclable material collected by municipalities, private companies and others. CalRecycle may do this by lending directly to California manufacturers located within the boundaries of a Recycling Market Development Zone (RMDZ) that reduce manufacturing post-industrial waste, and/or reduce post-consumer waste destined for landfills by production of recycled content raw materials or final products.

Cycle 25 is now open and applications are being accepted on a continuous basis, subject to fund availability. See the RMDZ Loan Program web page for the most current cycle information.

Awards

Loan Recipient Search: Displays data on number of loans awarded, amounts, and how funds were used.

Criteria

Approval of Criteria

General Eligibility

The general criteria apply to all RMDZ loans, regardless of the type of project.

Loan Applicant Type

Eligible applicants include:

  • Private, for-profit entities.
  • Nonprofit organizations (except private schools).

Facility/Manufacturer Type

  • Preprocessor
    • A preprocessor produces an intermediate product which requires further processing by another manufacturer.
    • The preprocessor must result in new diversion from landfills, i.e., beyond that which was already being diverted.
  • Finished Product Producer
    • A finished product producer makes a good or package in a form which requires no further processing or forming before it is offered for sale to an end-user. It does not include intermediate products, such as plastic pellets sold as feedstock to a converter for fabrication into a consumer product).

Project Location

The project, or if a mobile operation, the primary business location must be located within a Recycling Market Development Zone.

Feedstock Waste Material Types

  • Organics (green waste and food waste)
  • Recycled fiber (paper, textiles including mattresses, carpet, and wood)
  • Plastic
  • Glass
  • Construction and demolition
  • Tires
  • Other waste materials that are generated in California and landfilled.

Environmental Requirements

  • Feedstock/Waste material diversion from landfills of feedstock waste materials. 

For purposes of this program, “newly diverted” means the tons of materials that are currently being landfilled or used as alternative daily cover that will instead be diverted as a result of this project.

Project Eligibility Criteria

In order to be eligible for consideration, a project must meet the following criteria and types of projects described below: 

  • Statutes: The “highest priority” for loan funding, according to Public Resources Code (PRC) section 42023.4(a)(3), shall be given to projects that demonstrate that they will increase demand for a recyclable material, which is normally disposed in California. 
  • Regulations: The California Code of Regulations (CCR) sections 17909 and 17933 further specify that priority shall be given to projects that satisfy “additional statewide recycling market development objectives” and priorities that are determined by CalRecycle. 
  • Project location: The project must be located within a recycling market development zone [PRC Section 42023.1(f)].
  • Project diversion: Each project must result in the diversion of non-hazardous solid waste from California landfills [14 CCR 17930].  
  • The project must involve reducing manufacturing waste or making new products out of recycled material [14 CCR 17932].
  • Projects using post-industrial materials must meet the definition of secondary waste material (Public Resources Code, section 42002(f)) “means industrial byproducts which would otherwise go to disposal facilities and wastes generated after completion of a manufacturing process, but does not include internally generated scrap commonly returned to industrial or manufacturing processes, such as home scrap and mil broke.”

The following project categories and examples are provided to assist potential business borrowers. CalRecycle staff determines feedstock eligibility and final project qualification is determined by CalRecycle.  The categories include, but are not limited to, the projects specified below:  

Eligible Projects 

  1. Waste Prevention
  2. Reuse
  3. Recycling, Composting, and Anaerobic Digestion
  1. Producing recycled raw feedstock material
  2. Manufacturing recycled-content finished products

1. Waste Prevention

Waste Prevention projects change the way products are made or packaged to prevent or reduce solid waste. This can be accomplished only by modifying equipment or processes, improving operations and maintenance, and changing materials in manufacturing.  The project will result in less waste being generated during the manufacturing process.

Examples of eligible projects:

  • Modifying equipment or processes to make products using less raw material or packaging. 
  • Converting to optimizing equipment to reduce waste generation. 

Examples of ineligible projects: 

  • Buying recycled or reusable pallets, reusable containers or reusable filters that are not directly involved in the making of a product. 
  • Procurement of “environmentally-friendly” office products.
  • Manufacturing or procurement of bio-degradable products.
  • Reclamation of scrap metal.
  • Production of single use plastic bags.
  • Production of polystyrene food containers.

2. Reuse

Reuse projects will prolong the useful life of a product, delaying final disposal or recycling. Reuse is the repair, reconditioning, washing, or treatment of a worn or used product that makes the product useable again for its originally intended purpose.

Examples of eligible projects: 

  • Separating construction and demolition (C & D) debris or other salvageable items by material type for sale.
  • Resurfacing or re-sawing reclaimed lumber from old buildings for decking and paneling. 
  • Sorting and repairing used plastic garment hangers from department stores. 

Examples of ineligible projects: 

  • Making home or automobile repairs. 
  • Repairing consumer items or appliances.
  • Laundry services.
  • Collecting and/or distributing food. 
  • Selling used items in thrift shops.
  • Dismantling automobiles or white goods.

3. Recycling, Composting and Anaerobic Digestion

Recycling manufacturers either produce a recycled content raw material/feedstock for use by other manufactures that further process the material, or produce a final product.  Below are examples of projects for each of the type of recycling projects.    

a. Producing a recycled raw material from non-hazardous solid waste.  

Examples of eligible projects:

  • Agricultural and commercial plastic film cleaning.
  • Producing recycled-content plastic pellets, flakes, or chips. 
  • Producing crumb rubber from recovered tires.

Examples of ineligible projects:

  • Collecting and/or sorting of non-C & D recyclables.
  • Crushing, grinding or baling recyclables for ease of transport.
  • Using recyclables as alternative daily cover at landfills.

b. Producing a recycled-content finished product from non-hazardous solid waste and/or a recycled material. 

Examples of eligible projects:

  • Manufacturing plastic pallets or lumber.
  • Producing mulch or compost.
  • Projects using anaerobic digestion to convert biodegradable feedstock such as food waste, green waste, and agricultural residuals into high-value products, including but not limited to, soil amendments, fertilizers, renewable natural gas or hydrogen, and electricity.
  • Manufacturing colorful glass tableware, trophies and gift items from recycled glass. 
  • Making rubberized asphalt and molded rubber products from crumb rubber.
  • Converting rolls of recycled paper into such products as boxes, kitchen towels, table napkins, and facial tissue. 

Examples of ineligible projects:

  • Printing operations.
  • Land application or reclamation projects using mulch and/or compost.
  • Production of single use plastic bags. 
  • Production of polystyrene food containers.

Ineligible Projects 

Ineligible projects include electronic waste, hazardous waste, metals, transformation, single use plastic bags, the do not meet the intent of AB 2449 (Levine, Chapter 845, Statute of 2006) and the definition of Secondary Waste Material (Public Resources Code, section 42002(f)); and polystyrene food containers.  In addition, materials that are banned from landfills are also not eligible for a loan.

Funding

Loan Amount

  1. The maximum loan amount is $2,000,000 or 75 percent of total project cost, whichever is less.  
  2. A borrower may and its related entities may receive more than one loan, but may not have more than $3,000,000 in total principal outstanding on all RMDZ loans, or $5,000,000 in total outstanding principal on all CalRecycle loans at any one time.

Matching Funds Requirement

The RMDZ Loan Program has a matching funds requirement. The borrower must contribute at least 25 percent of the total project cost. The purposes of the match requirement are for the borrower to have financial risk in the project, which will incentivize the business to remain successful during the loan term, and to ensure that there is adequate equity in the loan collateral. In addition, the matching fund requirement must be in an amount sufficient to ensure that the business has sufficient working capital to pay operating expenses.

Schedule of Fees and Costs

  • Loan Application Fee: $300, due at the time of loan application submittal.
  • Loan Closing Points: 0.50 percent, due when loan funds are paid into escrow.
  • Loan Interest Rate: 4.00 percent, fixed, on a simple interest basis.
  • Prepayment Penalty: None.

Loan Term

The maximum loan term is 10 years when collateralized by assets other than real estate or 15 years when partially or wholly collateralized by real estate. Some loan terms may be less than 10 years to match the useful life of the equipment.

Use of Loan Fund Disbursement

Businesses and non-profit organizations can use the funds(a) for:

  • Machinery and equipment,
  • Working capital,
  • Real estate purchase (b), (maximum of $1,000,000)
  • Real estate improvements (b), and
  • Refinancing of onerous debt that results in increased diversion, and
  • Funds can also be used for financing loan-closing points.
  1. RMDZ loan recipients are required to agree that when purchasing products with loan funds in the 11 SABRC categories, the borrower agrees to purchase recycled-content products when available and fitness and quality are equal to that of non-recycled products.
  2. Loans made to finance the purchase of commercial real estate and/or to make necessary real-estate improvements will require the application of sustainable building practices.  At least 25% of the loan funds approved for improvements to property would have to be applied toward those costs involving sustainable building products and services.  This would apply only to the portion of the loan funds used for improvements.  Examples include the use of recycled paints, carpets, cubicles, and rubberized asphalt.  The installation of energy efficient lighting, heating and cooling systems, water conserving and shade producing landscape would be applicable.  Borrowers are required to provide invoices showing the amount that 25% was purchased and the types of products and services purchased.

Permit and CEQA Requirements

Permit requirements are as follows:

  • Eligible projects do not qualify for a loan unless they are past the design phase of the project and are prepared for construction. Applicants must obtain all significant applicable federal, state, and local permits prior to CalRecycle Loan Committee consideration of the application. Significant permits may include: Air Permit, Water Quality Permit, Fire Permit, Solid Waste Facility Permit, Business License, and/or a Conditional Use Permit.
  • Applicants shall complete all California Environmental Quality Act (CEQA) requirements for their project before the loan request is presented to the loan committee.

Loan Underwriting Requirements

  1. Experience: Satisfactory work and educational experience of the facility operator.
  2. Ability to repay the loan: The applicant must be creditworthy, and the project and the borrower must have the financial capacity to generate sufficient cash flow from the sale of recycled-content products to repay the loan (or other sources if the borrower is a government entity).
  3. Adequacy of the collateral: The collateral value must match or exceed the loan amount.
  4. An owner of 20 percent or more of the applicant business generally must guarantee the loan. CalRecycle may ask other owners or key management to also provide a guarantee.

Residential real estate (primary single family residence) collateral
It is CalRecycle policy not to take a primary single-family residence as collateral.  An applicant may request the CalRecycle to make an exception to this policy, and the Calrecycle will consider the request on a case-by-case basis, subject to the standard staff and loan committee recommendation process.

Public Infrastructure and Capital Improvements

Should a local jurisdiction need financing, Calrecycle staff will refer them to other state programs and provide some assistance in applying for those funds. 

Timeline and Cycle Details

Loan applications can be submitted at any time and are processed on a first-come-first-served basis, subject to availability of program funds. The RMDZ Loan Program is a revolving fund. In addition to received appropriated funds, monthly loan repayments become immediately available to fund new loans.

Application

To apply for Cycle 24, use the loan application materials on the program's Forms and Documents page.

Questions

If you have questions that are program-specific, please complete and submit our contact form or send an email to loans@calrecycle.ca.gov.

Recycling Market Development Zone Loan Program Home

Last updated: November 8, 2017
Recycling Market Development Zone Program: http://www.calrecycle.ca.gov/RMDZ/
Zone Assistance: Regional Zone Contacts or LAMD@calrecycle.ca.gov, (916) 341-6199