A new loan program aimed at helping small businesses and new entrepreneurs was discussed Monday night by the City Council of Webster City. The council gave its general consensus to move ahead with developing the plan.
"Webster City has a history of successful companies starting off as one- or two-person businesses," said David Toyer, economic developer for the city. A loan program would be a way to continue to capitalize on that idea as well as attract new opportunities, according to Toyer. He proposed that the city create the loan program to specifically target new businesses and entrepreneurs in higher technology fields.
While those involved with economic development continue to seek out larger manufacturers, he said it's important to explore opportunities that can be created by supporting new small businesses and entrepreneurs.
"By encouraging the growth of new business in these sectors we will continue diversifying and stabilizing our local economy," Toyer said. Helping those high technology businesses might also be a way to attract and create jobs that could help reduce out-migration of young people, he added.
Toyer said the proposed loan program would provide loans of up to $15,000 and would have a five-year term. The first two years would be interest-only payments. Loans would have to be secured at 50 percent of the value, he said. To qualify, applicants would have to have received technical assistance from Small Business Development Center or business acceleration program.
City Manager Ed Sadler reminded the council that more than two years ago, funds were set aside for economic development.
"The vast majority of that money was for us to entice industrial-type jobs," he said, adding that the proposed loan plan diverges from that plan.
"We're proposing to use some of that money to go after those smaller businesses - smaller entrepreneurs - who are going to pick up jobs three at a time, five at a time or 10 at a time," he said. "It is a change in philosophy for the council."
"We know it's not all fleshed out," Sadler said, "but we wanted to get your input before we moved ahead."
Councilman Doug Getter asked if existing business could be included in the program.
"I don't know if we are talking just in a manufacturing context. Are we talking service, retail, wholesale? Some of those issues probably need to be defined," Getter said.
Getter also asked for a better definition of "high technology fields." He also asked who would review and approve the applications.
"Just so you know, the council would always have final approval," Sadler said.
"So what you're looking for from us is, 'do we like this?' It's still kind of in its embryo stage?" Adams asked.
Sadler said any guidelines or input the council has would be appreciated.
Adams suggested the economic development advisory committee should look over the plan and help to develop it further. Getter recommended that successful retired business people might be good resources in developing the loan plan.
Toyer also proposed an energy efficiency loan program to assist commercial and industrial customers with making capital expenditures on energy efficiency. The loan program would offer 12-month, no interest loans with a maximum cap of $50,000 to a single customer, and a maximum of $250,000 for the entire loan program. Toyer said eligible projects would need to apply by Oct. 31. He said the money would be repaid over a period of time not to exceed Jan. 31, 2014.
"One of the things that we are able to do through Cornbelt Power Cooperative, is to offer rebates for energy efficiency programs that our companies take on," Toyer said. "If they replace outdated, energy-hogging lighting with new energy-efficient lighting, we'll give them a partial rebate on that cost."
Toyer said that rebate money goes fairly quickly.
The idea of a loan program to help finance energy-saving projects came out of the council's goal setting sessions last fall. Toyer said it takes between 12 to 36 months for the projects to pay for themselves.
"This is a way to help some of our businesses, make it easier on them rather than for them to write us a big check," he said. The loan repayments would be spread out over the course of a year and could be added on to the company's utility bill.
"We can help finance this on a short term basis and make it a little easier for them to absorb," he said.
The City Council approved the energy-efficiency loan program.
Toyer and the economic development advisory committee brought two proposed budgets to the council for the remainder of 2012 and also for fiscal year 2012-2013. Toyer said the committee met four times since it was established last fall. For the remainder of the current year, the committee proposed a budget of $26,015. For the coming year, the committee recommended a net budget of $22,820.
City Manager Ed Sadler said the advisory committee was established in part to advise the City Council on the best use of funds for economic development.
"Part of the expenses for economic development are included in the budget for the 2012-2013 as proposed, however some of the expenses recommended by the committee are outside of the budgeted expenses and would therefore come from economic development reserves," Sadler said.