7. EDSR 11-13-2006 - Laserfiche WebLink

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Draft Dovmtown Business Revitalization Loan Program November 13, 2006 EDA Mee[ing Page 2 of 2 during this construction period. While the Micro Loan Policy includes a program specifically fox downtown businesses, the pxogxam is limited in eligible uses of the loan funds (e.g. working capital is not eligible) and requires significant building improvements be made. Staff proposes that the loan program be funded and administered through the EDA's existing Micro Loan Fund. Therefore, staff is requesting the EDA's feedback on the proposed pxogxam prior to staff's report to the City Council on November 20`h. Downtown Business Revitalization Loan Program Purpose: To provide businesses in the Downtown District a direct short-term, low interest operating loan that could be used toward working capital, cash flow, business sustainability and capital expenditures. Amount: Up to 10,000. Rate: 3% Term: 2-years. Security: None. Permitted Fund Uses: In addition to the permitted uses outlined in Section II (1) of the existing Micro Loan Fund Policy, the following items would be considered eligible under this specific program: • Working capital • Refmancing of existing debt • Inventory Issues for Discussion Staff requests the EDA's feedback on the proposed downtown business loan program. It is important to note that the proposed program still places some additional risk fox the EDA as compared to its traditional Micro Loan programs, including: • Lack of security/collateral to protect the EDA in case of default • Questionable uses of the funds • Lack of documentation/proof of need and amount of assistance • Lack of cash equity and private lending partner Another issue is whether ox not the downtown business community will be interested in a loan pxogxam. Staff attended the recent River's Edge Downtown Business Association meeting to discuss the proposed pxogxam and gather feedback. The business persons in attendance of the meeting indicated that a loan would not be used by downtown businesses.