Agenda - 01-16-1999- 2 - Laserfiche WebLink

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Adopted: 12/04/95 Revised: 06/23/97 Revised: 02/27/98 C�T7�`►[!i 5[K��7�11 Y'f rC�7:hf 1�Z�] rA GOAL: TO DEVELOP A LOAN POOL TO PROVIDE ALTERNATIVE FINANCING FOR SMALL BUSINESSES IN ORANGE COUNTY In September 1997, the Board of County Commissioners voted to proceed with the loan pool program. Some changes were made in the program's Operating Policies and Procedures, such as establishing a residency requirement for loan. recipients, and requiring participants to follow the minimum standards of the Orange County Living Wage Ordinance, if adopted. The County Attorney then drafted Articles of Incorporation and Bylaws for a non - profit entity which would administer the program. These documents, establishing the Orange County Small Business Loan Program Company, were approved in December 1997. The non - profit will be governed by a nine - person Board of Directors; six representatives to be chosen by participating banks, and three representatives of the County. Currently, the EDC staff is working to re- confirm agreements from local banks to provide $500,000 for the loan pool. Staff is also working to complete agreements for third -party contracts to service the loans. Staff turnover has caused some delay in completing these negotiations. The loan pool should be operational early in the 1998 -99 fiscal year. BACKGROUND & OBJECTIVES The Economic Development Strategic Plan calls for the encouragement of small business in Orange County through "creative financing options." At the strong encouragement of the EDC Board of Directors, the staff began working with the local banking community to develop a program. In December 1995, a preliminary report was made to the Board of County Commissioners outlining the details of a loan pool. The Commissioners directed the staff to continue work and bring back final- details. RESOURCE REQU]J2EMENTS Based on estimates from similar programs, the Orange County loan pool will require significant staff time as well as direct funds for marketing and third -party contracts. The best estimate of staff time is approximately 520 hours, valued at approximately $13,000 per year. This is time of current staff and would replace time spent on current activities. Third -party contracts are estimated at $15,000. In addition, the County needs to provide $150,000 over the next 3 years in a loan loss reserve that would cover defaults in the loan portfolio. Total staff and other costs are $28,000 annually plus $50,000 annually for the loan loss reserve. Aside from re- prioritization of staff, the program would require $65,000 in . new appropriations, $50,000 in the Capital Improvements Plan and $15,000 in the EDC operating budget.