Another $300,000 is expected to flow to local small businesses in coming months, pending City Council approval of a new Revolving Loan Fund and the renovation and sale of four city-owned residential properties.
The new fund will restore to small businesses the ability to receive city help to invest in capital improvements to their properties, new equipment or machinery or other working capital needs. The city’s existing downtown loan program, with $300,000, is tapped out until the loans are repaid.
Eventually, the new fund will leverage federal and private dollars to invest more than $5 million in small businesses throughout Raleigh during the next five years.
The city’s budget and economic development committee this week approved a proposal to create a new fund of $600,000, made available as the outstanding loans are paid back and through the sale of vacant homes on Whistle Court (purchased by the city initially for a stormwater construction project). City Manager J. Russell Allen expects sales of the properties to return at least $300,000.
In addition, the committee passed a motion to reassign management of the fund to the Raleigh Area Development Authority (RADA), a nonprofit entity providing incentives, home ownership opportunities and counseling services primarily in Southeast Raleigh.
The organization was initially formed by the city in 2003 to make capital investments in under-developed areas of Raleigh. But the recession prevented its ability to do so, up until now, said RADA president Wallace Green.
“Now that we have an economy, we have a good opportunity to get back to where we started and what the city actually cast for us,” Green said.
RADA plans to use the initial funding to raise an additional $400,000 from foundations and banks. Once it reaches $1 million, RADA will apply for certification from the Federal Department of the Treasury as a Community Development Financial Institution. The distinction will enable the city to receive federal funding for the program.
Eventually, RADA’s Green said they will also ask the city to approve a bond issue to free up another $2.5 million for the program. In total, the new revolving loan fund could invest $5.65 million in small businesses during the next five years.
The committee also made a motion to add a city staff member to the RADA board, in timing with the creation of the new fund.
The full Council must still approve the proposed changes.