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<br />Draft Downtown Business Revitalization Loan Program <br />November 13,2006 EDA Meeting <br />Page 2 of2 <br /> <br />during this construction period. While the Micro Loan Policy includes a program specifically <br />for downtown businesses, the program is limited in eligible uses of the loan funds (e.g. <br />working capital is not eligible) and requires significant building improvements be made. <br /> <br />Staff proposes that the loan program be funded and administered through the EDA's <br />existing Micro Loan Fund. Therefore, staff is requesting the EDA's feedback on the <br />proposed program prior to staff's report to the City Council on November 20th. <br /> <br />Downtown Business Revitalization Loan Program <br /> <br />Purpose: <br /> <br />To provide businesses in the Downtown District a direct short-term, <br />low interest operating loan that could be used toward working capital, cash <br />flow, business sustainability and capital expenditures. <br /> <br />Amount: <br /> <br />Up to 10,000. <br /> <br />Rate: <br /> <br />3% <br /> <br />Term: <br /> <br />2-years. <br /> <br />Security: <br /> <br />None. <br /> <br />Permitted Fund Uses: In addition to the permitted uses outlined in Section II (1) of the <br />existing Micro Loan Fund Policy, the following items would be <br />considered eligible under this specific program: <br />. Working capital <br />. Refinancing of existing debt <br />. Inventory <br /> <br />Issues for Discussion <br />Staff requests the EDA's feedback on the proposed downtown business loan program. <br />It is important to note that the proposed program still places some additional risk for the <br />EDA as compared to its traditional Micro Loan programs, including: <br />. Lack of security/collateral to protect the EDA in case of default <br />. Questionable uses of the funds <br />. Lack of documentation/proof of need and amount of assistance <br />. Lack of cash equity and private lending partner <br /> <br />Another issue is whether or not the downtown business community will be interested in a <br />loan program. Staff attended the recent River's Edge Downtown Business Association <br />meeting to discuss the proposed program and gather feedback. The business persons in <br />attendance of the meeting indicated that a loan would not be used by downtown businesses. <br />