Agenda - 01-05-1987 - Laserfiche WebLink

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152 3 John McKee inquired of Maury Klein if he had used the 504 loan program for his business and Maury replied that he had used other types of financing, since at the time he needed money, Orange County was not included in the program. Maury Klein said that he had spoken to Janneke Hermans on many occasions, and that if CEDCO had had a presence in Orange County it would have helped him Last summer, in creating more than 20 jobs for Orange County. He said he felt it was a facility many small businesses might find helpful. James Harris,. Community Development Coordinator for the Town of Carrboro, who was in attendance at the meeting, was asked by John McKee if he had candidates for these Loans in Carrboro, and James Harris replied that although no specific candidates had been identified, Carrboro's revolving Loan program did not offer enough finance for many small businesses, and he thought that the 504 program would be a good way to top up the loans which the Town of Carrboro could make to suitable businesses, and that the town would certainly Like to see these Loans available in Orange County. • Paul Williams asked if a wholly--owned subsidiary of a Large corporation would be eligible for a SBA 504 Loan, and Janneke Hermans replied that such a company would n . qualify. John Gastineau inquired about the fees for these Loans, and how they were funded. Janneke Hermans replied that the total fees were between 2-1/2 to 3% of the Loan amount and the amount of the fee is rolled into the loan. Each month the borrower makes two payments, one to the bank and one to the SBA. Dennis !Nowell asked about foreclosure history, and Janneke Hermans replied that nationally the foreclosure rate is 3%, although there have been no foreclosures of the loans put together by CEDCO, adding that the SBA 504 program is not the disaster which the old SBA "direct Loan" program had been — it had a terrible foreclosure history. Sylvia Price asked about how the program was publicized, and how companies knew about the SBA 504 loans. Janneke Hermans replied that 90% of their inquiries come through banks, and that CEDCO makes a careful promotional program to inform all banks in the area. Walk- ins are a very small percentage of the inquiries. She said she thought this was appropriate because SBA 504 Loans are riot for all companies but are a narrow—focus program. Several EDC members commented upon the job creation requirements of one permanent job for every $15,000 of SBA funds. It was clarified that the jobs created must be permanent jobs, so that construction workers would not count. Lee Butzin stated that the job creation had to take place over a two year period, though Loans could be justified on the basis of trends of past employment growth. Members discussed the appropriateness of CEDCO, a Wake County CDC, offering services in Orange County. Lee Butzin stated that CEDC's charter only allows them to go to counties contiguous with their service area, and now that they serve both Wake and Durham