RIDGWAY – If a $500,000-grant is accepted by the State of Colorado, Community Development Block Grant loans will be available to small businesses in Ouray County through the Region 10 Business Loan Program.
Region 10 League for Economic Assistance and Planning, Inc. is the provider of business loan funds serving Montrose, Delta, Hinsdale, Gunnison, San Miguel, and Ouray counties. Region 10 has asked Montrose County to act as a grantee in an application to the state for a Housing and Urban Development-Community Development Block Grant for $500,000. The purpose of this grant, which has a period of two years, is to provide money for loans made to new and existing businesses in the six counties.
Paul Gray, executive director of the Region 10 League for Economic Assistance and Planning, and Paul Dunford, Region 10’s finance director, received the necessary support from the Ouray Board of County Commissioners at Monday’s meeting in Ridgway. Region 10’s grant application will go before the state this week.
If and when the loan to Region 10 is approved, small businesses in Ouray County will be able to apply for two types of loans. Regular CDBG loans are available in amounts greater than $100,000 and Micro-enterprise Loans will be available in amounts of $100,000 or less.
It is a requirement of the program that these loans to businesses create or retain at least 25 full-time equivalent jobs and that at least 51 percent of those jobs will be taken by individuals whose household income for the past 12 months was equal to or less than the federal moderate income guidelines for that particular county, meaning that most of these jobs must go to individuals who have been unemployed or underemployed during the past year.
The loans will be made at a prime rate of 3.25 percent plus up to two additional points depending on the risk factors in the borrower’s situation. Gray said it is a requirement that CDBG loan funds leverage an equivalent amount of funds loaned by area banks, which serves to magnify the economic benefit of the plan. He also said that the interest paid on the loans will eventually go toward extending more loans.
“Once these loans are repaid, the interest from the borrowers will be re-lent,” Gray said. “The idea here is that the money goes round and round, cycling the money over the years to help many businesses.”
For the grant, Montrose County will act as the grantee and Region 10 will act as a sub-grantee. Under this arrangement, Region 10 will perform all loan client evaluations, preliminarily approve applications and prepare loan documentation. Upon receipt of the funds from the state, Montrose County will then issue checks to Region 10 in an equivalent amount for ultimate disbursement to the approved loan clients. Region 10 will retain $80,000 of the $500,000-grant to cover its administrative costs over the two years of the grant. Gray said the grant will be an integral part of helping businesses survive in this current economic downturn.
“We are excited about this,” he said. “It is our way to get additional monies into the economy. As we pull out of this recession, there will be a lot of demand and requests for loans. We really want to get the ball rolling on this.”
After receiving approval from the Ouray County Commissioners to participate in the program, Gray and Dunford were on their way to Delta County to ask for its approval. They said they would be formally applying for the $500,000-grant from the state later in the week.
For more information on Region 10’s loan program. visit www.region10.net/.