IDA considers lowering loan minimum to small businesses
WOODSTOCK – The Shenandoah County Industrial Development Authority contemplated reducing the threshold for lending money to small businesses during its annual meeting Monday.
The loans come from a cash pool awarded to the IDA as a rural business enterprise grant from the U.S. Department of Agriculture. The idea behind the program is that small businesses (with profits of less than $1 million and fewer than 50 employees) apply for a loan from the county’s pool of cash that they couldn’t get otherwise.
Shenandoah County Director of Economic Development Jenna French said these loans could be used to supplement a bank loan, and IDA Secretary Evan Vass suggested the loans could also go to businesses that had a high likelihood of creating jobs in the county, but might be too risky for a bank to consider.
“We’re not in the business of competing with the banking industry,” Vass said. “This (grant program) gave some flexibility for slightly higher risk (businesses), and I’m not suggesting risky-risky, but there’s some flexibility that could be offered by this body versus somebody in the banking industry.”
French said the IDA has $118,000 in the account right now, a sum that she said has “been sitting somewhat dormant for the last several years.” Part of the reason for the money’s stagnancy, she said, is because loan requests have to be between $50,000 and $99,000.
She asked the IDA board to consider reducing this threshold to something in the neighborhood of $10,000-15,000.
“We want to make sure that the funds are getting out there, in the community, when applicable, to help support business development or business expansion,” French said.
Since the funds are restricted to this program, and the county is unable to use them for anything else, Vass said the only risk associated with distributing the money is that a business wouldn’t be able to pay it back.
“Your loss would be you can’t loan it back out to future businesses,” he said. “You can’t invest it in future businesses. That would be the risk to this program.”
IDA Chairman Vincent Poling confirmed that there was no other financial loss possibly associated with the program. “So the outcome is, if we loan it and someone defaults, the recourse is that we’re embarrassed over it? Is that the only recourse?”
Besides not having those funds available for future business applicants, Vass said, yes, that’s it.
The IDA did not make a decision on lowering the loan threshold Monday, but will consider the matter and hold another discussion at its next meeting, which is planned for sometime in April.
Also on Monday, the IDA approved a resolution to hire Draper Aden Associates to evaluate all privately owned industrial zones in the area. The rationale for this, French explained, was to help businesses seeking to start operations in the county to better understand potential sites.
“When we get a lead, and it says that they’re looking for a 40-acre parcel, we have sites that fit the 40 acres but that may not all be developable,” French said. “Having those tools helps us really put together a better pitch.”
Draper Aden is already contracted by the IDA to perform industrial site readiness studies on IDA-owned land, Vass explained. The county was interested in hiring a contractor to perform similar studies on privately owned areas, and modifying the IDA’s contract with the company would allow the county to do so.
“What we’re really doing is leveraging your contract with Draper Aden as a vehicle to get this done,” Vass said. “All we’re asking you to do is to modify the contract so that we are utilizing a procured agency to do this, it just happens to be the same one that’s doing this up and down the valley.”
He added that the resulting studies would “allow us to give a baseline for some of these private properties.”
Vass also said that the county’s budget for these expenditures, from which the money to contract out Draper Aden would be drawn, is less than $20,000.
The IDA also elected its officers for two-year terms Monday, and the candidates for each position ran as unopposed incumbents and won unanimously. Poling was re-appointed as chairman, Jay Winkfield was re-appointed as vice chairman, secretary went to Evan Vass and treasurer went to Harrison Nicholson.
The IDA went into a closed session at the end of the Monday meeting to discuss a prospective business or business expansion, but took no action afterward.