Reno overhauls little used loan program

Reno officials hope to streamline a business-loan program targeted to small companies and firms that want to locate downtown.

Although the program has been in place since 2001, it's been used by only two borrowers, said James Graham, economic development manager for the Reno Redevelopment Agency.

About $400,000 has been loaned, and $600,000 remains available.

Graham and other redevelopment executives suspect that small business borrowers have been put off by the amount of paperwork required in the past.

"More paper doesn't make good loans," Graham said.

Along with reducing the amount of paperwork required in the program which has been dubbed the "Reno Opportunity Growth Fund" the program has been revised to more carefully target small businesses.

The proposed changes will be reviewed by the City Council which also serves as the board of the redevelopment agency in about 90 days.

The loans are available to businesses throughout the city.

They're intended for small business start-ups, including companies in business less than year, and business owners from low- and moderate-income groups who show they have the ability to manage a business.

Other factors that will be weighed in the loan-application process include whether the applicant has been unable to secure financing from traditional lenders and whether the business will be located in an economically distressed area of the city.

The size of loans handled by the revised program would range from $5,000 to $50,000.

Previously, the limits ranged from $10,000 to $200,000.

If borrowers need a larger loan, Graham said the redevelopment agency is working with banks that would provide additional funding.

Interest rates are set at 4 percent in the new program unchanged from the previous incarnation although the term of the loans will change.

Previously, loans for fixed assets could extend 10 years and loans for working capital could extend seven years.

In the new program, a maximum of six-year loans would be available.

The proposed program specifies, too, that companies using the city loans would be required to hire more than half their employees from low- and moderate- income groups.

That requirement is set by the U.S.

Department of Housing and Urban Development.

The city uses HUD's community block grant program to finance the loan pool.

The new loan program would be overseen by a loan committee that includes increased numbers of private lenders.

That group would replace a committee composed mostly of city officials.

The proposed guidelines would prohibit use of the loan program for refinancing of existing debt.

Borrowers would be required to have equity investment in the project, and the program encourages them to seek help from outside agencies with business plans and financial reporting.

The smallest borrowers those requesting $5,000 to $15,000 would be required to get assistance, Graham said.