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Home My WebLink About08 11 2008_Bozeman Revolving Loan Fund Update and Request for FundingPrsr n*J August 6,2008 222F,ast Main Street, Suite 102 Bozeman, MT 59715 Ph: 406.587.3113 Fx: 406.587.9565 B ozeman City commrs slon P.O. Box 1230 Bozeman, MT 59771, Dear Bozeman City Commissioners: Thank you fot considedng our tequest for funding from the City's Development Impacts Fund ('Big Box Fund") to rc-c pLt^Itze theBozeman Revolving Loan Fund. The Bozeman RLF has a proven ftack tecotd as a successful economic development program of this city and it deserves yoril additional support. . The companies in the Bozeman RLF' have created more than 236 quahry, high wage jobs withrn the City of Bozeman. . The estimated total economic impact of these loans is more than $16.5 million. ' During the last 8 months, the Bozeman RLF has made $675,000 in new loans to 5 Bozeman companies. These new loans are ptojected to create at least 60 additional hish wase iobs within the Ciw of Bozeman.- Sfith the curentbalance avatLable to lend from the RLF and the projected monthly repayments, the Bozeman R-LF will not be able to make more than $400,000 in new loans peryear. Considering the increase in loan request dudng the past year, the cunent economic slowdown and tightening ctedit matkets, we anticipate a greater need from Bozeman businesses for RLF' loans during the next 12-36 months. \Tithout additional funding to re- capttahze the Bozema;n RLF, we will not be able to meet this increased demand. . Sfith $100,000 in additional funding, the Bozeman RLF's annwal lending capaciq would increase to $500,000 (creating at least 25 new high wage iobs within the City of Bozeman each year). "Big Box" funds will be well utilizedby the Bozeman RLF. I thank you fot your considetatton. Sincerely, Bob Hietala Chief Executive Officer Ptospeta Business Netrwotk Access the Opportanities Pros pero B u s i ness N etwork. com 134 nror/ July 8,2008 222 lt.ast Nlain Street, Suitc 102 Bozcman, NIT 59715 Ph: 406.587.3113 lrx: 40(r.5fJ7.95(r5 B ozeman City Commis sion P.O. Box 1230 Bozeman,lvIT 59771 Dear Bozeman City Commissionets: I appteciate the opportunity to ptovide you all with an update on the City of Bozeman Revolving Loan Fund (RLF) and to make a request for additional funding. As you know, the RLF provides capital for business start-up and expansion, and supports economic development and the cteation of high paylng lobs within the City of Bozeman The RLF leverages private investment dollats and revenues from outside the atea, and tecycles loan dollars as RLF repayments go back into the Fund to be re-lent to new borrowers. As of June 30, there arc a total of 11 loans out to local Bozeman businesses representing technology, e-corrlnefce, manufactunng, and bio-medrcal rndustries. These exrstmg loans total $1,935,000, with a current balance of $1,337,000. To date, 236 quality jobs have been created by companies in the Fund. Ptospeta has been a good steward of the Fund. Srnce the ttansfer to Prospera rn2006, there has been a significant increase in lending activity and a 0o/o loan delinquency rate. (A summary update on the RLF is attached to this lettet.) The increase rn lending activity has tesulted in a depletion of the funds available to lend from the RLF, which will limit new lending activity for the rest of this year. Given the current depletion of the RLF and its demonsttated success in creating quality jobs and supporung economic growth, I am requesting that the Commission commit a minimum of $200,000 ftom the City's Development Impacts Fund (Big Box Fund) to rc-capitalize the Bozeman Revolving Loan Fund. The Bozeman RLF is an rmportant economic developmerit program of the City that expands the economy by bringtng in revenues from outside the area. This additional funding will provide for the continued creation of high paying jobs and the continued economic growth of the City of Bozeman. I thank you for your consideration. Sincerely, Bob Hietala Chief Executive Officer Prospera Business Network Access the Opportanities Prospero Busi nessNetwork. com 135 Bozeman Revolving Loan Fund Update The City of Bozeman's Economic Development Revolving Loan Fund was established through the repayment of economic development funds loaned to local businesses from Community Development Block Grants (CDBG) obtained from the Montana Department of Commerce in the 1980s. The Fund is designed to leverage pdvate investment in new businesses for the pulpose of generating quality jobs withrn the City of Bozeman. In May 2006, the City of Bozeman and Prospera Business Network (then known as the Gallatin Development Corpotation) reached ^n ^greement to ftansfer the Fund and the administration of the Fund to Prosoera Business Network. Status of Revolvins Loan Fund at Start of Asreement fMav 2006): B loans outstanding $1,096,900 total loan amount 3 loans makrng interest-only paymeflts Fund balance (available to lend): $277,692 Administrative responsibilities ttansferred to Prospera Business Netwotk Independent, 7 memberLoan Committee (with representatives of the City of Bozeman,local lenders and the business community) to make all lending decisions. Current Starus of the Revolvrns Loan Fund (as of lune 30. 2008): 11 loans outstanding $1,935,000 total loan amount, cuffent pdncipal outstanding: $1,337,000 1 loan making interest-only payments Fund balance (available to lend): $88,000 2 existing loans have been paid in full and a 3'd will be paid in fulI by the end of 2008 236 jobs created by companies in the Fund Pdvate investment leveraged: ranges from $1 RLF: $2 private investment to $1 RLF: $50 private investment Calculated total economic impact: $16.5 million frs:#136