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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: March 13, 2007 <br />Action Agenda <br />Item No. , -~• ~,_ <br />SUBJECT• Orange County Small Business Loan Program <br />DEPARTMENT: Economic Development PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): INFORMATION CONTACT: <br />A. Recommendations for Change <br />B. Loan Fund Discussion Dianne Reid, 245-2326 <br />C. 501(c)(3) Determination Letter <br />PURPOSE: To grant $75,000 currently held in a loan loss reserve account for the Orange <br />County Small Business Loan Program to the non-profit Orange County Small Business Loan <br />Program Company to .serve as seed money for a revolving loan fund and to transfer an <br />additional $75,000 to the Company so that the full $150,000 originally committed to the program <br />is available for lending to small businesses in the County. <br />BACKGROUND: In 2000, Orange County established a program for small business loans to <br />help stimulate the creation of good jobs for Orange County residents as well as to stimulate <br />successful business development and expansion in Orange County. <br />To accomplish this, anon-profit entity, the Orange County Small Business Loan Program <br />Company (the Company), was incorporated: <br />To assist Orange County...in carrying out the County's governmental functions through <br />serving as a conduit entity to make and facilitate loans to small businesses in the <br />County... <br />In June 2002, the Company received its IRS determination letter stating that it is "exempt from <br />federal income tax under section 501 (a) of the Internal Revenue Code as an organization <br />described in section 501(c)(3)." The IRS letter is provided at Attachment C. <br />Eight participating banks each committed to lend up fo $62,500 to the Company, at the prime <br />interest rate, with money to be re-loaned to businesses at prime plus 2-3 percent, depending on <br />the term of the loan. The total commitment of the eight banks was thus $500,000. Orange <br />County provided a loan loss reserve equal to 30 percent of the total pool, or $150,000. <br />