Small-business loans and downtown redevelopment

by Paul Schreiber

SBJ Reporter

pschreiber@sbj.net

Making it easier for entrepreneurs coming down to Springfield's center to secure target properties is the Small Business Development Loans Program operated by the city. Ann Peck, city loan officer, said the program began in 1984 as potential "gap" monies after both the bank and the business owners have maximized their loan values. Since its inception, the city has shelled out $8,157,976 on nearly 80 projects in the downtown area.

While the largest business development check to date is a $450,000 loan written last August to Downtown Seville LLC, the amount could be higher, Peck said, contingent on funds available, which cap at $1 million per year. Interest on loans is 5 percent with payback periods of 15 to 20 years for property and 10 years for equipment.

Principal qualifying criteria for development loans are that the business must eliminate a "slum or blight" condition and create jobs, Peck said.

Making it easier to dress up a property once it's been acquired is the Faade Loan Program administered through Urban Districts Alliance. Since the program's first loan in 1995, there have been 41 takers totaling $1,022,535 in loans, said John Simmons, executive director.

Faade loans are at 5 percent interest with 10-year terms and a $40,000 maximum, Peck said. There's no payment in the first five years, but the loan is paid back in years six through 10. "It's a way to get their storefront fixed up without having debt service," she said.

Springfield Business Journal has made use of both of these loan types. In August 1995, owner Dianne Elizabeth took out a $55,620 development loan toward purchasing the paper's present address at 313 Park Central West. In September of that year, Elizabeth secured the first ever faade loan of $20,000.