02-22-2010 Council Bill 2814 (Tabled)ß¹»²¼¿ ׬»³
February 22, 2010
TO: Honorable Mayor and City Council through City Administrator
FROM: Jim Hendryx, Economic and Development Services Director
SUBJECT:
Woodburn Business Assistance Loan Program
CITY COUNCIL GOALS:
Promote Economic Development – complete the Economic Development Plan
in partnership with the Chamber of Commerce; revisit the City’s economic
strategy regarding business attraction, retention, and sustainability.
:
RECOMMENDATION
Approve the attached resolution amending the Business Assistance Loan
Program Guidelines.
:
BACKGROUND
In May 2009, the City Council established the Woodburn Business Assistance
Loan Program with approximately $221,000 to loan to businesses. At that time,
guidelines were established to help guide the program. While there has been
interest in the Loan Program, no formal loan requests have been submitted. At
the Council’s direction, the loan guidelines have been amended to make the
program viable to small businesses seeking financial assistance from the City.
Additionally, the program is being promoted through the Chamber and local
lending institutions.
:
DISCUSSION
The City established the Woodburn Business Assistance Loan Programin May
2009, with approximately $221,000 in funds to loan out to both existing and new
businesses located within the City. To date, no loans have been made through
the program. The City Council requested that staff re-evaluate the loan
guidelines, and as a result, discussions have occurred with local lenders in an
effort to improve the Loan Program. Changes to the program guidelines are
recommended to clarify and improve loan criteria. Council needs to
Agenda Item Review: City Administrator __X___ City Attorney __X___ Finance ___X_
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Honorable Mayor and City Council
February 22, 2010
Page 2
understand that with these changes comes a greater risk to the City on
recovering loan funds from the borrowers. The Council of Governments, who
administers the program, recommends maintaining the current standards while
actively promoting the program, something that has recently been initiated.
Lending standards have changed significantly over the last few years. People
without excellent credit are finding it extremely difficult to qualify for any type of
loan, and in particular, business loans. Banks require higher equity from people
seeking any type of business loans. Banks are not making loans to businesses
without a proven track-record and well thought-out business plan. Start-up
businesses are not getting funding from banks. All of these factors affect the
City’s Business Loan Program.
:
FINANCIAL IMPACT
The Mid-Willamette Valley Council of Governments administers the Business
Assistance Loan Program. Their management of the program is paid for out of
program funds.
These changes to the Program Guidelines will increase the risk to the City of
recovering loan funds from borrowers.
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COUNCIL BILL NO. 2814
RESOLUTION NO. 1959
A RESOLUTION MODIFYING THE BUSINESS ASSISTANCE LOAN PROGRAM GUIDELINES
the City Council established a Business Assistance Loan
WHEREAS,
Program with approximately $221,280 of funds to loan, and no business has
come forward with a valid loan application;
, the City Council is concerned that the Business Assistance Loan
WHEREAS
Guidelines are too restrictive and create a situation where businesses are unable
to qualify for assistance; and
, the City Council directed staff to revise the Business Assistance
WHEREAS
Loan Guidelines so that they could be reconsidered, ,
NOW, THEREFORE
THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
The City Council hereby modifies the Woodburn Business Assistance
Section 1.
Loan Program Guidelines as attached to this Resolution as Exhibit “A”.
Approved as to form:
City Attorney Date
Approved:
Kathryn Figley, Mayor
Passed by the Council
Submitted to the Mayor
Approved by the Mayor
Filed in the Office of the Recorder
ATTEST:
Christina Shearer City Recorder
City of Woodburn, Oregon
Page 1 – Council Bill No. 2814
Resolution No. 1959
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