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Rich offer for Carbondale entrepreneurs

Carbondale launched a $100,000 economic development experiment Tuesday night in the form of a revolving loan fund for innovative businesses that may be shunned by conventional lending institutions.”This is to encourage home-grown businesses,” said Mayor Michael Hassig after the Board of Trustees meeting. “There are a lot of talented people in the town and valley that need seed money to bring their ideas to fruition.”Numerous details haven’t been worked out, but the initial nuts and bolts include:-The Carbondale Economic Development Council will form a subcommittee comprised of lenders and business people to award the loans.-The subcommittee will directly award loans, without input or review by the EDC or Board of Trustees, although Hassig expects the subcommittee to file reports.-The minimum loan will be $2,500, with no maximum.-Many, if not most, of the loans will be unsecured.-The $100,000 comes from past years’ account surpluses in several town departments, and not the 2003 budget.-The loans will be open to most types of businesses.-The loan will usually have to repaid within 18 months.Faced with budget shortfalls starting next year, Carbondale hired Jo-an Barnett as its first professional economic development director earlier this year. Hassig said the idea of a revolving loan fund to encourage businesses that are “unbankable” has been around for the past few years, but the town decided to move forward when Barnett came on board.Barnett first suggested the trustees approve loans that top $20,000, but at Tuesday night’s meeting the trustees decided to leave the decisions up to the pros on the loan committee.”I’m not sure businesses would want this public,” Barnett said, referring to trustee meetings which are open to the public and also broadcast on television. “This way, it won’t happen.”Susie Darrow was the only trustee who questioned the closed-door nature of the loan review process. “It’s taxpayers’ money. … It’s everybody out there’s money, and we are supposed to be stewards of it,” she said.When asked after the meeting about his comfort level with the trustees having no say in how loans are awarded, Hassig said, “I looked at the people on the committee. They are more qualified to evaluate loan applications than we are.”The loan committee currently includes chairperson Liz Cox, of Alpine Bank, certified public accountant Chip Bishop, John Stelzriede, of Mesa National Bank, and Wanda Cooley, of Wells Fargo Bank. Others will be appointed.When asked, Hassig said it’s possible a Carbondale Board of Trustee member might be appointed to the committee, even though they are not professional lenders. “A trustee could bring a broader community dimension to the committee,” Hassig said.Revolving loan funds are common in economic development efforts. The Western Colorado Business Development Corporation, a Grand Junction nonprofit, averages $750,000 in loans each year.”Revolving loan funds have really shown over time to be a really cost effective way to go,” said WCBDC loan fund administrator Dean DiDario.DiDario said his default rate is less than 1 percent. “That’s very low,” he said.Although businesses pay interest on the loans, that interest doesn’t usually translate into more funds for the corporation. “There are a lot of administration costs with the loans,” DiDario said. “If they can’t get a bank loan, we have to do more baby-sitting, so administrative costs go up.”For more details on the Carbondale Board of Trustees meeting, see today’s edition of the Valley Journal.


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