Thursday, October 19, 2017 Elyria 66°
Advertisement
Advertisement

Local News

Elyria finding few takers for small business revolving loan program

Advertisement

ELYRIA — A revolving loan program for small businesses city officials started in 2014 with Community Development Block Grant funds has a problem: No one wants the city’s money.

Since the inception of the program, just one company — Heartfelt Help Home Care with an office on Middle Avenue in downtown Elyria — signed on the dotted line for a loan to jump-start the business. In 2015, the company received $10,000 as startup capital and to purchase office supplies and equipment.

But with little new interest in the program, city officials are exploring if it is best to loosen the stringent guidelines before the federal government asks for the unused money back. The city has seven years to dole out the funds backed by the U.S. Department of Housing and Urban Development and this is year four, said Ashley Scott, the city’s director of community development.

Scott said that she knows of three small businesses that could benefit from the loan fund, but they won’t apply because of red tape and paperwork. As a result, Scott is recommending City Council make the loans more business friendly.

The idea is to structure a loan program after home improvement programs that help low- to moderate-income homeowners to repair their homes. Those come with lower interest rates and loan forgiveness clauses, although Mayor Holly Brinda said some aspects won’t work with businesses.

In starting the program, Brinda said the hope was that downtown businesses would use the money to improve building facades and address code violations. When that proved to be too restrictive, language was added to the loan details to also include working capital.

But nothing lured business owners to the program.

“Imagine having the problem of not being able to give the money away,” Brinda said. “But I want to develop a problem that works for Elyria, because I’d rather see it in the hands of small businesses than return it.”

The original loan pot of $50,000 still has around $40,000 available. Loans are capped at $10,000 and $15,000, depending on the need. However, Brinda said that could be relaxed with certain agreements.

The program also offers small-business owners assistance with the Small Business Development Program at Lorain County Community College that works with each applicant on a clear business plan.

Revolving loan programs can be problematic in many regards, even if cities don’t have a problem finding willing businesses.

A year ago, Lorain was dinged by the state auditor for not collecting more than $600,000 in loans given to businesses through its revolving loan program. Only after the state office got involved did Lorain officials learn the loans were not being collected and paperwork about the loans did not match up to the program details, including interest rates, set by City Council.

Contact Lisa Roberson at 329-7121 or lroberson@chroniclet.com. Follow her on Twitter @LisaRobersonCT.

Click to view comments
Advertisement
Advertisement
To Top

Fetching stories…