At the request of municipal staff, the members of the Growth Fund committee voted on Monday, March 22, to de-federalize the city’s revolving loan fund, set up by the United States Economic Development Administration over 20 years ago.
These funds, which come back under local control, will likely then be used to match a planned grant from the EDA to transform the Grand Forks Herald building into a technology hub. The city had the option of removing federal chains from the loan fund, along with its onerous reporting requirements, and making it a city-controlled business loan program.
“It’s a question of priorities. What would you prefer to spend this money on? Said Meredith Richards, director of community development. “Would you prefer to have it in the form of a revolving credit fund managed only locally, or would you rather take that financing and use it for the fit-up of the Herald building?” “
Launched in 1997, the EDA loan fund was set up with $ 2 million to provide businesses with low-interest loans as they recovered from the flood.
But that does not leave the city without tools in its economic development toolbox. The COVID Response Needs Unmet Needs (C-RUN) revolving loan fund is set to take its place, after its $ 1.3 million was spent to help businesses weather the pandemic. Once that happens and companies start paying back those loans, the EDA requirements, such as using the funds only for pandemic-related purposes, disappear and the city will be left with a loan fund. which largely resembles the original one.
The plan involves certain risks, both for the grant and for C-RUN. The withdrawal of the proven revolving loan fund means the city gets around $ 1.385 million to spend on the Herald building. These funds are intended to be used to provide a 50% local counterpart to an EDA grant of $ 1.08 million for the construction costs of the building redevelopment. The city applied for the grant in September, but it has yet to be approved. That same month, the EDA denied a separate grant request for $ 600,000. this would have partly funded the mentoring and training programs for tech start-ups setting up in the hub. Richards, however, told the Herald that she was optimistic about the construction grant.
“We haven’t heard anything official from the EDA, but very positive things,” she said.
As for the C-RUN program, time is running out when funds need to be spent. The city has until June 2022 to lend the balance of the fund, otherwise the remaining money may have to be returned to the EDA, which could then transfer it to a community that has used up its share of money for the loans. to businesses. Likewise, the city could benefit from additional funding in the event of a quick loan from C-RUN.
To date, eight companies have received C-RUN loans totaling approximately $ 320,000 since the program began in September. City staff at Monday’s Growth Fund meeting said demand for loans was slow, due to a variety of factors, including reluctance to take on more debt and lack of familiarity with the program. The committee on Monday authorized changes to the program to make it more attractive. The changes include extending the term from five to seven years, authorization to use loans to purchase equipment, as well as increasing the loan limit from $ 50,000 to $ 200,000.
Given these changes, as well as a more aggressive information campaign for the program, Richards said she believes the fund can be fully utilized and that it is possible to see it grow with additional funds. of the EDA.
“We showed our ability to spend these funds, and if (EDA) gave us the opportunity, we could spend even more,” said Richards.