Loan Fund Grows, Increasing Ability to Helps Businesses
4 Jan 2016
In the past 12 years, the Phelps County Development Corporation has loaned $2 million to 24 businesses through its revolving loan fund.
In 2002, the local option municipal sales tax for economic development had generated just shy of $40,000. PCDC put $36,000 of it to work in 2003 by issuing two loans, one for a startup and the other to attract a new business.
By 2009, the PCDC board had set up a mechanism to set aside some funds specifically to build the size of the reserves. Between the savings plan and the interest on loans, the fund is over $800,000. Today, about $670,000 is available in cash and ready to loan to businesses.
The loans fill a gap between what a bank will loan and what a business needs to proceed with a project or to just get started.
In the past, business owners have secured PCDC loans for technology updates, remodels, start-up costs and succession planning. The loan fund helped renovate the Sun Theater, remodel Dairy Queen and construct a new Ag West Commodities headquarters in Holdrege at the former location of the Tower Motel.
The revolving loan fund can lend up to 50 percent of a project’s total cost, and owners must provide at least 10 percent equity. The loans must be repaid in 10 years for fixed assets or 5 years for other assets. The interest rate on the loans is at least 4 percent, but no higher than half the bank’s interest rate.
Businesses considering applying for a loan through the revolving loan fund should first contact their local bank before contacting PCDC. If a bank is unable to fund the entire project, that’s where PCDC’s revolving loan fund can help.
The loan fund is made available through the local-option sales tax, also known as LB840.
For more information about the loans, please call Alli Donohue at PCDC at (308) 995-4148.