The city of Racine has experienced a respectable level of success with its Small Business Revolving Loan Fund, which was established in 2015. The Small Business RLF was created to support viable business projects that had been denied traditional financing.
The Small Business RLF funds project requests ranging from $25,000 to $250,000. It requires that one full-time equivalent position be created for every $35,000 borrowed. Since its inception, the program has assisted five local businesses, created nine new full-time positions, and retained 20 full-time positions.
On Thursday, the Community Development Committee will hear a request to create a Community Development Block Grant (CDBG) Micro-enterprise Revolving Loan Fund.
Officially speaking, the Mayor, City Clerk, and Director of City Development would be authorized to execute a written agreement with the Redevelopment Authority of the City of Racine, consistent with federal regulations, for $62,700.00 of CDBG funds for the purpose of creating and administering a CDBG Micro-enterprise Revolving Loan Fund.
The Community Development Committee and the Common Council have already allocated $62,700.00 of CDBG funds for the purposes of assisting microenterprises through the city’s 2018 Annual Action Plan.
According to staff analysis: “The City of Racine is poised to benefit from proximity to the Foxconn development in many ways. Some of these emerging opportunities include growth and increased demand in construction trades, retail and entertainment industries, supply-chain businesses, and professional services.”
The Micro-enterprise Revolving Loan Fund targets business owners supporting households with low/moderate incomes, and it encourages reinvestment in Racine’s retail and commercial corridors. The Micro Fund aims to ensure that Racine residents have access to Foxconn-related opportunities through entrepreneurship.
These micro-enterprises are also commonly under-capitalized and unable to secure traditional lending. The minimum funding amount of $25,000, combined with the collateral, equity, and job creation requirements of the Small Business RLF are often prohibitive to early-stage micro-enterprises. In response to this need, the Common Council voted to authorize $62,700 in Community Development Block Grant (CDBG) funds for a micro-enterprise financial assistance program.
What is the Community Development Block Grant program?
The proposed Micro-enterprise Revolving Loan Fund would offer loans from $3,000 to $15,000 to City of Racine-based, owner-operated micro-enterprises that have been in operation for six months to three years.
Authorized uses of the funding include:
• Operating capital for leasing space, insurance and/or utilities, staff salaries outside of owner salaries.
• Purchase of inventory, supplies, accounting and inventory software, furniture, fixtures, and equipment
• Rehabilitation of owner-occupied or leased space (maximum $2,000 construction costs)
• Professional services including engineering, architectural, local permits or fees, business consulting
• Equipment purchase (with or without installation costs)
• Refinancing business debt in conjunction with financing other eligible costs
Businesses that do not qualify for these microloans includes liquor and tobacco stores, adult entertainment, short-term loan businesses, and passive real estate investments.
The Community Development Committee will meet at 7 p.m. Thursday in Room 205 at City Hall.