Kennebunk considers micro-loans for struggling businesses


KENNEBUNK, Maine – The Kennebunk Select Board is considering a micro-loan program offered by the city’s economic development committee to help local small businesses struggling during the COVID-19 pandemic. But selectpersons have some reservations.

The maximum loan amount per business would be $ 5,000. The funds would help businesses with their payroll, adaptive improvements, marketing and signage, rent, utilities, insurance and taxes.

The committee proposes to take $ 50,000 from the city’s existing Tax Increase Funding (TIF) accounts to fund the loans. A total of 48 low-interest payments would begin six months after approval.

“I hardly can imagine a more appropriate use of IFF funds,” said EDC President June Huston. “TIF funds are a direct result of the success and growth of businesses in the TIF district. “

Huston presented the proposal to the board during its first reading last week. The board will hold its second hearing – and possibly vote on the program – this Tuesday, June 23.

Many businesses have been affected because they have had to shut down temporarily in light of pandemic-related orders issued by Governor Janet Mills, according to EDC’s proposal.

“Despite federal grants and payday loans, many of our small businesses in the hospitality, retail and restaurant industries continue to suffer from severe cash flow shortages,” the committee wrote.

The Southern Maine Finance Authority (SMFA) would administer the program, underwrite, service delivery and maintain accountability for each loan.

“There are inherent risks in carrying out a program like this, but there are also inherent risks in not doing so due to the challenges that many small businesses are currently facing,” said the executive director of the SMFA, William Armitage, to selected persons.

Robert Fiore, the branch manager of People’s United Bank in the city, told the board that local small businesses are struggling.

“We’ve kind of lost touch with some of these people,” he said. “They don’t know what is available to them. They are afraid. They want to continue their activities.

The loans would go to small businesses located in Kennebunk and employing less than 50 people. Applicants will be required to provide two years of federal and state tax returns and a six-month financial statement, along with a detailed explanation of their need for a loan.

CFO Joel Downs said the funds could be drawn from TIF money not yet spent at the end of the current fiscal year. Downs said the money originally set aside for fiscal 2020 to close the Main Street brick sidewalk and for traffic lights and related equipment could be used.

Selectperson Ed Karytko said he is concerned that some of the loans will not be repaid and that the city will not have the funds it needs for projects in the city center.

“When I first heard about this, I was a little uncomfortable using taxpayer money for loans,” Karytko said. “I need to talk about it and get out of it. “

Selectperson Chris Cluff referred to an emergency loan fund currently offered by the Kennebunk Development Corporation (KDC). He said he wanted to see if there was a rush of requests for the KDC loan first.

“I think there is an opportunity to look and see if there is a real need for this before we jump in with full feet to use taxpayer money for loans,” Cluff said.

Selectperson Shiloh Schulte said he had a lot of questions, but noted that the loans would not be a “rescue” and would help local businesses that have gone through tough times without being responsible. Schulte also responded to Karytko’s concerns, noting that the city has varied needs that TIF funds could be of use to.

“Sometimes that means sealing the bricks and fixing the roads, and sometimes it means making sure the businesses exist at all,” Schulte said. “We have to decide what is the priority. “

Chairman of the Board, Blake Baldwin, who has professional banking experience, spoke.

“The banker side of me would say no,” Baldwin said. “The other side of me is how to help people, and usually this angel wins. I really want to find a way, if possible, to help the small businesses in our town.

Earlier it was pointed out that there is a risk of a conflict of interest because Baldwin, Cluff and Select’s board vice chairman Wayne Berry have small businesses in town and could therefore claim l one of the loans. After the three selected people confirmed that they did not intend to apply, the rest of the board voted unanimously to allow them to continue the discussion.

Two members of the city’s budget committee gave their views during the public comments.

John Costin said small business owners should use up all of their credit sources first before “asking residential taxpayers to lend them money.” Costin also disapproved of taking funds that voters approved for one purpose and diverting them to another.

“As much as I think it’s well-meaning and compassionate, I don’t think it’s an appropriate use of taxpayer dollars right now,” Costin said.

Dick Morin called the proposal a “community gesture to return taxpayer money generated by the businesses themselves” to these TIF district accounts.

“I strongly encourage moving forward and hope that at second reading we can move forward to a positive end,” said Morin.

The select committee was due to hold a workshop on the proposal before its meeting on Tuesday.

Source link


Leave A Reply