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IEM # 6. ~ 7. <br />ver <br />MEMORANDUM <br />TO: Economic Development Authority <br />FROM: Catherine Mehelich, Director of Economic Development <br />DATE: January 14, 2008 <br />SUBJECT: Consider Micro Loan Applications <br />- Waterfall Salon & Day Spa <br />- Nicole's Finishing Touch Salon <br />Attachments <br />• Finance Committee Minutes dated January 8, 2008 <br />• Staff report to Finance Committee dated January 4, 2008 <br />• Business Plan Letter for Nicole's Finishing Touch Salon Inc. dated 12/29/2007 <br />• Background City Council Meeting Minutes 9/18/2006, 11 /20/2006, 12/17/2007 <br />• City of Elk River Micro Loan Fund Policy <br />Background <br />On January 8`", the Finance Committee reviewed the following applications to the <br />Downtown Business Revitalization Micro Loan Program: <br />1) Waterfall Salon & Day Spa <br />- $25,000 Working Capital Loan, 3% interest, 2-year term <br />2) Nicole's Finishing Touch Salon <br />- $25,000 Working Capital Loan, 3% interest, 2-year term <br />The attached EDA Micro Loan Policy was amended in November 2006 to include the <br />Downtown Business Revitalization Program. The attached staff report to the Finance <br />Committee and attached City Council minutes provide additional background on the <br />establishment of the program which was designed to assist existing downtown businesses <br />(established when construction began April 10, 2006) during the construction period of the <br />new buildings (until completion December 31, 2007). <br />As stated in the past, the Downtown Business Revitalization Program should be considered <br />"high risk" lending, having the potential of not being paid back due to the nature of the <br />flexible application requirements and limited underwriting review. The loans are secured <br />only by personal guarantee of the business owner. Since the new program's inception <br />November 2006 one application has been awarded (Daddy O's Cafe -January 2007). <br />