Dunsmuir takes big step to secure business loans

Ami Ridling

The Dunsmuir City Council made great strides at its meeting last Thursday to improve the city’s procedures for issuing business loans and maximizing its loan repayment potential.

The council voted unanimously to approve an agreement between the city and Great Northern Corporation to administer business loan applications and secure loan repayments from the city’s Community Development Block Grant funds.

The agreement came after nearly a year of deliberations between city staff, a council subcommittee, and GNC representatives.

“I am really grateful that we are finally here tonight, and that we have come to a good understanding of what this community wants,” said GNC executive director Bonnie Kubowitz.

“We are on the road to recovery,” said acting city administrator Alan Harvey.

The $300,000 grant was approved for the city last year. Grant funds are intended to provide business assistance loans for two business expansions and two start-up businesses that would have the potential to employ eight full-time employees.

Great Northern Corporation, which will work as a team with Jefferson Economic Development Institute, will be compensated with 10 percent of the loan repayments, as well as a portion of the grant designated for program delivery and administration.

The remaining 90 percent of loan repayments and interest funds will be returned to the city to be loaned out for more business-related city projects.

Local business and trial attorney David Hicks volunteered to work as Harvey’s special assistant on this issue. He has provided ongoing support to a special city council subcommittee that was organized to ensure that the city takes full advantage of the grant and to implement policies to tip the loan repayment odds in the city’s favor.

“We have restored the ability of the city to reap the benefits of a much higher return on money loaned,” said Hicks, noting that in the past, the city issued business loans without taking proper security measures on their return. “The old way of doing things with a wink and a nod is over,” he added.

Under the new agreement for this block grant, GNC will do the following:

?   • Qualify potential loan applicants to determine if they have sufficient prior experience so that their business proposal will be successful and that the loans have at least an 80 percent likelihood of being repaid on schedule.

?   • Ensure that loan applicants have sufficient capital to invest in their businesses – not less than 10 percent of the estimated investment required to fund the project.

?   • Ensure that applicants’ proposed business projects are not too similar to other businesses as to endanger the economic viability of existing Dunsmuir businesses, thereby bringing new services to the city.

?   • Ensure that applicants are educated through JEDI and GNC’s application process so that their business plans are practical and that projections of full-time employment are reasonable and economically feasible.

?   • Ensure that loan applicants are credit worthy and any property or other loan security is not less than a First Deed of Trust.

GNC grant manager Seata Madison will oversee Dunsmuir’s loan processes.

To avoid a potential conflict of interest, loans under the CDBG program will not be issued to city employees or city officials.

GNC staff, with the assistance of (JEDI), will process every loan and submit loan packages to a Dunsmuir Loan Committee, which will make a decision on whether or not to approve the loans.

The city council will appoint local loan committee members who are knowledgeable about the requirements of small businesses and who have the experience needed to determine which loan applications are viable and most in the city’s long-term interest.

GNC will provide training to the loan committee on the evaluation of loan applications.

City employees will not be eligible for appointment on the loan committee, and committee members will not be eligible for CDBG funded loans.