MT. VERNON — City Councilman David Wood said he wants the city to take a second look at its Revolving Loan program.
“I have a longstanding objection to the Revolving Loan program,” Wood said. “When it comes time to go over the Comprehensive Plan, I think we need to look at this program as well.”
The Revolving Loan program was started in 1985, as part of a federal program aimed at creating jobs and helping business in local communities. According to City Finance Director Merle Hollmann, the city received $2.4 million as seed money.
“Employment is the key focus to keep or retain jobs,” Hollmann said. “The funds must be kept separate from other city funds, and can only be used for approved projects that fit within the federal guidelines.”
The first Revolving Loan was to Ford Square in the amount of $200,000. Over the years, a total of 38 loans have been provided to local businesses, for a total of $4.1 million. Hollmann said loans are repaid with interest, and the monies in the funds also earn interest. The monies repaid and the interest from the loans is then used to be loaned out again.
“There are only two things we can do with the funds,” City Manager Ron Neibert said. “We can make loans to qualifying businesses as long as they are creating jobs, or we can do infrastructure projects as long as they are supporting jobs.”
Hollmann said the recaptured interest generated from the Revolving Loan
program must be spent in the manner the federal program dictates.
The city’s Revolving Loan Committee reviews all applications for the loans, and presents its recommendations to the council for approval before funds are made available to the applicants. Loans are made at a rate of 3 percent interest for business with the exception of manufacturing, warehousing and distribution, which may be loaned at a rate of 2.75 percent interest, Hollmann explained. Businesses may apply for a minimum of $5,000 and a maximum of $450,000 with the exception of manufacturing, warehousing and distribution, which may borrow up to $1.05 million.