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JCIDA’s microenterprise loan fund is almost dry

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Small businesses seeking microenterprise loans from the Jefferson County Industrial Development Agency soon may be turned away empty-handed, as funding likely will run dry unless the agency finds a way to restore it.

The balance of the microenterprise fund — used by the agency to issue loans of $40,000 or less — sank to $32,500 Thursday with the approval by the board of directors of a $40,000 loan to Kimberly A. Stiles, Carthage, who will buy the Little Sisters Inn at Herrings, 35802 Route 3, from owner Jon A. Murdock. Loan funding will go toward the $300,000 purchase of the restaurant and 21-room hotel, where renovations are being planned.

After approving that loan, board members discussed how the microenterprise fund balance dropped so low, and whether the board’s policy of issuing loans might be too liberal. They also considered options for restoring the fund balance.

“I think this begs the question about the purpose of the microenterprise fund,” board member W. Edward Walldroff said. “I get apprehensive about issuing loans to pizza shops and bar-related enterprises, and in the past few years we’ve been getting known for it. Banks are bumping these businesses to us now. Demand has increased, but we’re not bumping more funds into it.”

Board member Urban C. Hirschey said, “I think we need to look at the success rate of this program and loans we’ve written off.”

The microenterprise fund was established in 1995, when Jefferson County acquired a $400,000 state Community Development Block Grant on behalf of the JCIDA.

Despite businesses that have defaulted on loans, the agency still has $452,000 in loans to be collected, CFO Lyle V. Eaton said. Microenteprise loans written off as bad debt by the agency in the past two years include $27,737 from Fort Drum Storage, $26,982 from Children 1st DayCare & Learning Zone, $38,227 from American Auto and $17,313 from Creative Touch Images.

Interest collected over the past 18 years on loans has enabled the agency to maintain a positive balance, but the agency now isn’t collecting payments fast enough to meet demand for loans, Mr. Eaton said. In 2014, it is expected to collect an average of $7,500 per month for the microenterprise fund.

“The fund could soon be depleted if we get more loan requests,” he said.

To solve that problem, a separate microenterprise loan fund could be established by the Jefferson County Local Development Corp. using surplus funding, Mr. Eaton said. The other option would be to seek state CBDG funding again.

Despite the low fund balance, JCIDA CEO Donald C. Alexander said, microenterprise funding has been put to good use by the agency.

“Money has been going in and out of that pot for years, and right now it’s virtually all invested in the community,” he said. “It just takes a while for the money to get back to us, so we have to replenish it somehow.”

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