The city of Delaware is moving closer to creating its own loan program to help small businesses reopen during the COVID-19 coronavirus pandemic.
Delaware City Council on June 1 voted to have legislation prepared for its Monday, June 8, meeting that would create a city small-business loan program in connection with Ohio's Economic and Community Development Institute.
Three institute officials participated in council's remote meeting, livestreamed June 1 via Facebook.
CEO and founder Inna Kinney said the Columbus-based organization has developed loans of more than $60 million that helped create more than 10,000 jobs since it was founded in 2004. The average loan is for $28,000, she said.
The institute's mission, she said, is to invest in people and communities for social and economic change by providing capital and educational resources to businesses.
In May, council began to discuss whether the city should create its own small-business loan program or donate to one started by Delaware County.
Sean Hughes, city economic development director, had suggested the city look into the Economic and Community Development Institute's program, and said June 1 he had experience with the group when he worked in Madison County.
Kinney said the institute has made business loans ranging from $350 to $350,000 during the pandemic.
The loan amounts, she said, are determined by looking at a business and gauging how much money it needs to open, stay open and rehire workers.
Its website, ecdi.org, identifies the institute as a 501(c)(3) nonprofit economic-development organization.
It receives much of its loan money from the U.S. Small Business Administration, the U.S. Department of Health and Human Services and other agencies, foundations and groups, Kinney said.
In Delaware's case, she said, "We propose a $350,000 (city contribution), which includes both loan capital as well as funds for us to operate the loan fund to provide the technical assistance and training that is so critical to the businesses."
The city's contribution would generate considerably more than $350,000 in available loan money to city businesses, she said.
Kinney used a hypothetical $100,000 loan to describe how the program works.
Delaware might contribute only $10,000 or $20,000 toward the $100,000, she said.
The rest would come from the agency and foundation sources, she said.
The institute averages a 3-to-1 ratio of funds provided by foundations, agencies and other sources to money available locally, she said. A loan will have notes tied to specific groups providing the funds, she said.
The meeting agenda said, "ECDI will disburse loans up to $25,000 to eligible businesses in the city of Delaware to assist with reopening and recovery costs. Loans from this fund will have a term of five years and carry an interest rate of 3%."
On April 1, the institute began to defer principal and interest payments on existing business loans and will do so now, for at least two months, for any new business loans written, Kinney said.
A loan less than $20,000 can be approved fairly quickly if the applicant can supply needed information, she said, while larger loans might take eight to 10 weeks.
As the city's money is repaid, it can be returned to its revolving loan fund, Kinney said.
"I keep thinking this almost sounds too good to be true," said Mayor Carolyn Kay Riggle.
Hughes said he thought the same thing in Madison County but was pleased with the institute's efforts.
"I came to the United States as a child from another country," Kinney said, "and this is the land of opportunity. I saw my parents start businesses ... many people start businesses. So I have three children and (ECDI) is my fourth child. ... Our work right now is more critical than ever, to save as many businesses as possible, to start as many new businesses as possible."
Steve Fireman, Economic and Community Development Institute president and general counsel, said the organization is highly regulated, with multiple annual audits, including those conducted for funding sources.
The institute's "ultimate goal is to make sure businesses are viable when they fund them, so that they can reduce the number of companies that aren't paying back their loans," Hughes said.
Another element is counseling and educational support for businesses, he said.
The city might want to keep working with the institute on a long-term basis, Hughes said.
While the city can withdraw from its program, "We're not looking at this as a short-term commitment. We're looking at this as a long-term relationship," Kinney said.
Also on City Council's June 8 agenda will be a measure to create a grant program, with $100,000 available, to assist businesses affected by the pandemic and a May 19 flood that impacted a number of areas along Delaware Run.
City finance director Justin Nahvi said the city has about $1 million in its economic-development reserve fund. The grant and ECDI programs will reduce that to about $558,000, he said.
City manager Tom Homan emphasized the reserve fund is not part of the general fund that covers the city's daily operations.