Revolving loan fund is in the works
Bi-State Regional Commission, Mercer County and Muscatine County are in the process of applying for a $750,000 revolving loan fund (grant) for economic development from the U.S. Department of Commerce Economic Development Administration (EDA). Bi-State is the applicant and administrator of the program, on behalf of two of the five counties Bi-State works for. The other counties are Henry, Rock Island and Scott in Iowa.
The loan fund requires any municipality requesting funds to provide a 25 percent match to the amount that is loaned out to a business.
"We are applying on behalf of Mercer and Muscatine counties for a $750,000 grant from EDA," said said Donna Moritz, administrative services director at Bi-State.
A two-county, $1 million revolving loan fund for businesses in the two Iowa and Illinois counties will be available, if the grant is approved by EDA.
The grant is not part of the recent economic stimulus plan signed by President Barack Obama, Moritz said. "It was written with last year's June flood in mind," she said.
Moritz is optimistic that the revolving loan fund will be accepted by EDA. "We're very optimistic that it will be awarded," she said.
She said Bi-State is in the process of developing the criteria for the loans, which needs to be submitted to EDA sometime this month. She estimated that it would be 30 to 60 days from then before they would have approval from EDA.
The communities receiving the grant, would be responsible for the $250,000 or 25 percent of any loan approved. The grant is for the counties, the loans would be given to businesses. As administrator of the loans, Bi-State would draw the money from EDA as the projects are approved, with 25 percent of the amount coming from the community where the business is located.
Bi-State also administers a revolving loan fund (RLF) for Scott County, Iowa and Rock Island County, Illinois. That fund was established in 1985 and has thus far loaned out $8.2 million for 90 transacations creating more than 2,800 jobs. Henry County also has a revolving loan fund.
The RLF program targets businesses that cannot obtain full financing because of conventional interest rates and lending/exposure limits applied by local lending institutions. It is intended to provide the funds that complete the financial package by financing the "gap" created by these conditions. The program offers low interest loans to industrial, commercial, light manufacturing, retail and service industries for expansion and development purposes. Funds can be used towards the purchase of fixed assets (land, building and equipment) and for working capital purposes.
"We're through the first two rounds of the process," said Mark Hunt, project manager for economic development at Bi-State.
The really great thing is that the money from the loans will be used in those two counties to help their standards of living.
"You're the only two counties in our region that don't have this economic development tool," said Hunt. "It will level the playing field."
He said that as the money goes into the counties jobs, will either be created or retained. "If there is no job creation, they can't come to the EDA for money," said Hunt.
Hunt said that Bi-State began working on the RLF project for Mercer and Muscatine counties in October last year. He said this is the final step of the grant process.
The first two stages involved pre-application process, where a rough draft format was used to float the proposal to the EDA. The second step was filling out a complete application, which was fully reviewed by EDA.
A yes, at that point sometimes means there is more information needed, said Hunt.
The criteria being put together for this final phase includes putting together a lending plan, who we're willing to lend to, lending rates, payback terms, job creation goals and job retention goals.