Remaking the city’s economic development funds that provide loans to budding and established Eau Claire businesses is being proposed as some programs have lost efficacy and new ones are needed.
A proposal that came before the City Council Monday calls for reducing six funds currently tapped into by businesses for economic development down to four.
That proposal calls for eliminating two rarely-used loan programs and replacing them with a commercial building facade loan fund.
A micro loan and revolving loan fund would be established, and the current U.S. Economic Development Administration revolving loan fund would continue.
The city is recommending that a micro loan fund and revolving loan fund be set up to help spur growth in the same way as the Regional Business Fund, which offered small, low-interest loans to help businesses expand and make other improvements.
The city learned last year it’s no longer eligible to participate in that fund program.
“Housing and Urban Development and the Department of Administration said we can’t co-mingle our funds,” city economic development administrator Mike Schatz said of the city participating in the Regional Business Fund program and receiving Community Development Block Grant funds. “We were asked to leave.”
No longer eligible for participation in the Regional Business Fund, the city is proposing moving $350,000 that it once invested in that program and another $150,000 from the Eau Claire Area Economic Development Corp. to the micro loan and revolving loan funds.
Micro loan funds are for small startups to small businesses that are growing and must be in business fewer than three years. The proposal by city staff would redirect $100,000 into this fund.
Another $400,000 would stock the revolving loan fund.
“We came up with those numbers based on the past history of the regional business fund,” Schatz said. “There were more applications for the revolving loan fund than micro loans.”
Several business development proponents wrote to the city to voice support, especially for the micro loan programs.
Karman Briggs, Western Dairyland Economic Opportunity Council director of jobs and business development, wrote in a letter to Schatz that most of the 25 loan inquiries received last year were denied because the applicants didn’t meet requirements of the loan.
“Due to this gap in service, I (believe) that the Eau Claire community and our local economy would be very well served by the development of a revolving micro loan fund that could enable the launch of multiple small businesses annually within the city of Eau Claire,” Briggs wrote.
Luke Kempen, director of the Wisconsin Small Business Development Center in Eau Claire, also wrote in a letter to Schatz that a micro loan program is desired because the Regional Business Fund has been out of commission and the alternative revolving loans don’t meet applicants’ needs.
“It seems the city’s revolving loan fund is geared more toward larger businesses with significant employee numbers,” Kempen wrote. “I have had clients tell me that because the city does not have a micro loan fund like RBF, they are considering locating their businesses in other communities outside of the city limits so they can access the RBF micro loan.”
The new Revolving Loan Fund program is separate from the city’s EDA revolving loan fund, which was sustained through federal grants because of Uniroyal closing.
“That’s been in existence since 1991,” Schatz said. “It has a lot of federal regulations. This new revolving loan fund is an alternative to that.”
The city is recommending keeping the EDA revolving loan fund in existence.
Revolving loan funds would be used for commercial and industrial projects. The loans can be applied for by manufacturing or service businesses (not restaurants), who have been in business for at least three years. Funds would be increased to $400,000 to support this program.
The downtown code compliance and strip mall center facade programs would be eliminated for lack of use, and the combined fund value of about $255,000 would go toward a commercial building facade program.
“The reason behind (getting rid of) the code compliance is it hasn’t been used in quite a while,” Schatz said. “Most downtown businesses have done fix-ups for any code issues.”
Commercial building facade funds would assist property owners and spur redevelopment of commercial buildings in the city, according to loan guidelines. The loans could be used on facade renovations, signage, exterior lighting and landscape improvements.
That loan gained support from Downtown Eau Claire Inc., whose chairman Steve Anderson wrote a letter touting these loan programs’ importance to business development and expansion.
Changes to the loan program will be considered by City Council members during their meeting at 4 p.m. today in council chambers at City Hall, 203 S. Farwell St.
Contact: 715-833-9206, firstname.lastname@example.org, @EDohms_LT on Twitter