TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to enter into an agreement with Grow America Fund, Inc., a non-profit organization, in an amount not to exceed $72,000, for a period of 12 months, 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 (Fund). The program became operational on June 1, 1997.
The National Development Council (NDC) 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. The Fund is operated as a subsidiary of NDC.
Continued City participation in the Fund offers Long Beach businesses access to the SBA 7(a) loan program. City funds are leveraged four-to-one by Fund dollars, through secondary market sale of the SBA-guaranteed portion of each loan. The SBA guarantees up to 75 percent of each loan. Grow America Fund, Inc., 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 the 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 Fund, which has produced 25 loans totaling $7,884,800 to Long Beach businesses. This amount represents the City’s ability to leverage its lending capacity by providing $9.60 in loans for every $1 of investment in the program. Currently, funds available for...
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