LAKEPORT ? Lakeport is gearing up to boost the city”s faltering economy a new business stabilization loan program. The city council approved the program”s guidelines Tuesday, and a land sale is in the works that may be used in part to fund the loan program.
When Lakeport Redevelopment Director Richard Knoll pitched the idea to the council at its Jan. 20 meeting, he proposed that the city sell property to the redevelopment agency and use part of the profit to fund the new loan program.
“Agency staff did make an offer to have the redevelopment agency acquire the 2.1-acre site on Bevins Court from the city in closed session. We hope to move forward on that,” Knoll said.
The council agreed to sell the property for $405,000, according to Knoll. He said the Lakeport City Planning Commission will review the proposal to ensure it is consistent with the city”s general plan, which Knoll said was a formality required by state law. Whether the city will use a portion of the proceeds from the sale to fund business loans will likely be back before the city council for discussion within a month, according to Knoll.
The purpose of creating the new program was to loan money to Lakeport businesses without requiring job creation, as the original loan program required.
The city”s existing business loan program is funded through the state Community Development Block Grant program, a federally funded program that aims to benefit low-income groups and eliminate blight in small cities and counties. The program requires the borrowing business to create one full-time job for a low-income person for each $35,000 that is loaned.
“The expansion of the program that we”re calling the business stabilization loan program, because it is proposed to be funded with city general fund money, would not have the job creation requirements. There would be no limit on the amount of money loaned, except what is contained within the guidelines, and no requirement for the targeted income group to benefit,” Knoll said.
What the new business loan program will require is that a borrowing business be located in the city or its sphere of influence, show it has historically been profitable and have been in business for more than two years. The loan amounts will range between $15,000 and $75,000, plus a loan origination fee of 1 percent of the loan amount.
According to the guidelines adopted Tuesday, the fixed interest rate will be equal to or lower than the West Coast prime rate, based on the business” ability to pay back the debt. Preferred collateral will be property valued at 125 percent of the loan.
Collateral will also be required in the form of owners” personal guarantees, and in the form of a Uniform Commercial Code Form 1 filing, which is a security agreement used to place liens against business property. Credit rating and existing debt will also be taken into consideration.
Contact Tiffany Revelle at trevelle@record-bee.com, or call her directly at 263-5636 ext. 37.
