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~~~j <br />City of <br />Elk ~ REQUEST FOR ACTION <br />River <br />To Item Number <br />Ma or & Ci Council 7.4 <br />Agenda Section Meeting Date Prepared by <br />Administration January 22, 2008 Catherine Mehelich, Director of <br /> Economic Develo went <br />Item Description Reviewed by <br />Consider Micro Loan for Nicole's Finishing Touch Salon Lori ohnson, Ci Administrator <br /> Reviewed by <br />Action Requested <br />The City Council is asked to consider approval, as recommended by the EDA Finance. Committee and <br />EDA, of waiving the "existing business" criteria and issuance of a $25,000 Downtown Business <br />Revitalization Micro Loan to Nicole's Finishing Touch Salon, Inc. with the following terms: <br />Rate 3% fixed <br />Term 2 ears <br />Securi Personal Guarantee <br />Structure Direct loan from EDA <br />Background/Discussion <br />Staff recently received an application from Nicole's Finishing Touch Salon for consideration of a micro <br />loan under the Downtown Business Revitalization Program. The attached staff report to the EDA dated <br />January 14, 2008 provided background on the program, application and discussion by the EDA Finance <br />Committee. Since the application requests special consideration of the City Council established program <br />criteria to benefit "existing downtown business", the Council is asked to consider the recommendations <br />and take final action on this particular request. <br />The EDA recently reviewed the Finance Committee's recommendation and concurred with the <br />Committee's recommendation fox approval of the waiver of the "existing business" criteria for this <br />applicant's specific circumstance and approval for issuing the $25,000 micro loan. <br />Financial Impact <br />The requested loan is in the amount of $25,000 and will be provided at a 3% interest and 2-year term. <br />The current cash balance in the EDA Micro Loan Fund is approximately $950,000. <br />As stated in the past, the Downtown Business Revitalization Program should be considered "high risk" <br />lending, having the potential of not being paid back due to the nature of the flexible application <br />requirements and limited underwriting review. The loans are secured only by a personal guarantee of the <br />business owner. <br />S:\EDA\Micro Loan Fund\Action Requested 1.22.08 Nicole's.doc <br />