TITLE
Recommendation to authorize City Manager to execute any and all documents necessary to enter into a new two-year agreement with Grow America Fund, Inc., with the option to extend the agreement for one additional two-year term at the discretion of the City Manager, for the purpose of continuing various business loan programs administered by Grow America Fund, Inc., and to promote the City’s business assistance loan programs. (Citywide)
DISCUSSION
On May 20, 1997, the City Council authorized the City Manager to execute an agreement with Grow America Fund, Inc., for the purpose of establishing a business loan program known as the Grow Long Beach Fund. The program became operational on June 1, 1997.
The National Development Council is a nationwide, private non-profit corporation designated as a Small Business Lender and is qualified to serve as a Small Business Administration (SBA) 7(a) lender. Grow America Fund is operated as a subsidiary of National Development Council.
Continued City participation in the Grow America Fund offers Long Beach businesses access to the SBA 7(a) loan program. City funds are leveraged four to one by Grow America Fund dollars, through secondary market sale of the SBA-guaranteed portion of each loan. The SBA guarantees a portion of each loan, usually 75 percent. Grow America Fund sells the guaranteed portion to investors. The sale proceeds are then used to make more loans. The remaining 25 percent of the loan is retained by Grow America Fund and serviced on behalf of the City. This arrangement leverages the City’s Community Development Block Grant (CDBG) funds and reduces risk in each loan. Since 1997, the City has deposited a total of $1,150,000 in the Grow America Fund which has produced
23 loans totaling $7,199,800 to Long Beach businesses. Currently, funds available for lending under the program total $3,646,661.
Since inception, the City has utilized CDBG funds as leverage for the Grow America Fund. As such, businesses rec...
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