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City to tackle loans plan
Hearing to determine if small business loan program is funded and to what extent
The City of La Grande’s budget committee will meet tonight to begin a series of budget hearings for the 2013-14 fiscal year.
The Urban Renewal budget hearing will convene at 6 p.m. tonight in the Colleen F. Johnson Community Room at Cook Memorial Library.
The Urban Renewal Agency approved the program policy of a small business loan program last Wednesday after some discussion on where the funds come from and how the program would be carried out.
In the proposed budget, the loan program has been allocated $200,000 to be targeted at start-up businesses within the Urban Renewal District. Economic Development Director Charlie Mitchell said that money primarily comes from interest on investments and the sale of real estate.
Once the program has funding, the agency will move forward to have a loan committee in place to begin accepting applications.
“We could certainly have the committee in place, I think, before we officially launch the program, in my opinion,” Mitchell said. “We don’t really have a program until we have funding allocated toward it.”
The loan committee will determine rates and terms of loans, but the intention is for loans to be short-term, “most likely in the three- to five-year range,” Mitchell said.
The biggest objections to the program came from agency member John Lackey.
“I feel very strongly that this is not an area we need to be in,” he said. “I don’t think the city needs to be in the lending business.”
Lackey said he was uncomfortable with using interest from investments to fund the program, but Mitchell said the agency’s legal counsel had given the OK. Lackey also questioned what kind of oversight the loan committee would have.
“The intent is to select professionals who do this for a living who understand how to evaluate commercial loans and business loans,” Mitchell said.
Parameters for checking applicants include a credit rating and a business plan. Additionally, the program will fund only one-third of an applicant’s entire need and has restrictions on the use of funds.
Agency member John Bozarth said he thinks that minimizes risk for a needed program.
“I think there’s a real need for the program, the reason being start-up businesses have a real hard time getting financing,” Bozarth said. “If you talk to the bankers, some banks won’t even look at them, regardless of what they have to offer.”
When it came to a vote, Lackey was the sole vote in opposition. Kelly McGee was absent.
Tonight’s hearing will determine whether the loan program is funded — and to what extent. The budget committee will move forward with the other city budgets starting Tuesday.