Home News Local News City agrees to fund new loan program

City agrees to fund new loan program

0
Daily Record File Photo Michael Espiritu, president of the Roswell-Chaves County Economic Development Corp., is pictured here during a December meeting of the Chaves County Board of Commissioners. Espiritu on Thursday addressed the Roswell City Council about a new city-funded revolving loan program that will be administered by the RCCEDC.

The Roswell City Council has voted for a new revolving loan program that will give businesses and nonprofit organizations another option for financing once the program specifics are worked out.

The Roswell Opportunity for Advancement Revolving (ROAR) Loan program, authorized by Resolution 20-28, was approved Thursday by a 9-0 vote of city councilors.

The low-interest loan program will be administered by the Roswell-Chaves County Economic Development Corp. It will start with $150,000 in seed money provided by a portion of the $1.26 million in set-aside funds that the city has been holding for several years from the now-defunct Community Development Revolving Loan Fund. That program was originally funded in 1988 by money from a Community Development Block Grant.

“This program has been a long time coming, a long time renovation of a revolving loan program locally,” said City Manager Joe Neeb. “It is coming at one of the best times where it will be the most valuable for us to help all of our business owners and all of our businesses, too.”

Neeb, who said he has worked with similar programs elsewhere, explained that the program is meant to provide “gap” financing for area businesses or nonprofit organizations also receiving some financing from banks or other commercial lenders.

The money could be used to help businesses renovate older buildings that need fire suppression systems or upgrades to meet Americans with Disabilities Act building code standards.

City documents also indicated that funds could be used to purchase property or equipment, to improve industrial parks or for working capital. Priority would be given to existing businesses, and one criteria for making loan decisions would be the number of local people employed by the organization or as a result of its new project.

RCCEDC President Michael Espiritu said Friday that he is not sure when businesses will be able to apply for loans. He said the EDC first has to work on specifics with the city and lenders. Then it will market the program to potential borrowers.

He told city councilors that he knows of several businesses that could benefit from the program, explaining that Small Business Administration loans and the coronavirus relief funds can be difficult for some entities to obtain.

“We can help so many with a little bit of money,” Espiritu said. “I don’t know where this is going to take off. I am almost frightened that we are going to be overwhelmed by the need. I have spoken to many businesses, and I will share with you that they are frightened, too.”

Espiritu said that all loans will be reviewed by the group’s Finance Committee, chaired by Christopher Palmer, Pioneer Bank chief executive officer and president. Several other local business professionals also serve on the committee.

The RCCEDC will work with the business owners and the lenders to put together a financing package, with the lenders determining creditworthiness and with RCCEDC most likely taking a secondary lien position on whatever collateral is provided, Espiritu said.

The loan payments and interest would be paid to the RCCEDC, which will use the money to replenish the loan fund and possibly cover some administrative costs. Espiritu said that the Economic Development Corp. is planning to provide regular accounting to the City Council about the program activity, at least on a quarterly and perhaps on a monthly basis.

City councilors asked questions about the loan process and the use of any interest earned, as well as what would happen in cases of default. Councilor Jeanine Corn Best suggested that Espiritu should request seed money from Chaves County as well, if the funds benefit businesses in the county located outside the Roswell city limits.

All nine councilors voted for the program, with Councilor Savino Sanchez absent. Some also expressed their support for the program as an investment in jobs and businesses and as a way to stabilize or increase gross receipts taxes, which provide money for government services and projects.

“Now more than ever we need the EDC to be functioning as effectively as they can,” said Councilor Jacob Roebuck, “and anything the city can do to help you guys out, we are excited for, I am excited for.”

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.