City moving forward with Business Recovery Loan
By Amanda Casanova
The Daily News
Published May 31, 201
GALVESTON - After a year of contending with state and federal roadblocks, city officials are finally moving forward with a $2.5 million Business Recovery Loan Program.
The program is funded from round one Community Development Block Grants, most of which is largely devoted to housing and infrastructure. With forgivable loans possible up to $50,000, the program could jump start about 45 local businesses.
"It's something that's critically needed," said Jeff Sjostrom, president of the Galveston Economic Development Partnership. "We've still got a lot of businesses on the island that could use some help."
The money, stalled by federal and state requirements, would make the fourth and final loan program to be created since Hurricane Ike. The partnership has implemented programs for short-term and other recovery loans for businesses after the storm.
Under the agreement for the $2.5 million, the partnership, the city and Houston Business Development all are involved in the program, with the Houston company choosing the borrowers.
The partnership only will facilitate the application process, Sjostrom said.
About $223,000 of the $2.5 million is earmarked for servicing, postage, mileage and other related expenses for both the partnership and Houston Business Development.
"If the applicant complies with all the rules and regulations, then that loan is forgivable," Sjostrom said. "It becomes a grant for the business."
The city council approved the agreement, and, pending state approval that should come next week, applications will be made available starting Monday, with the deadline for applications Aug. 8.
Also under the agreement, the city could be liable for any businesses that do not comply with the program restrictions.
"We're actually co-signing the loan," council member Steve Greenberg said.
To qualify for the loan, businesses must have been in operation within the city limits of Galveston before Hurricane Ike made landfall in 2008. Applicants then must undergo credit approval and background checks.
"Once the application is sent to the Houston Business Development, they have seven to 10 days to do the checks," Sjostrom said. "Then they make an approval or denial decision.
"No loans will be approved until the state reviews the applications," he added. "They just make sure everything is in compliance."
The program is set for a one-year term with businesses being required to meet some standards, such as hiring low to moderate income employees and not selling the business during the year.
"We're limited by funds," Sjostrom said, "but we'll process loans until the funds are expended.
"As we go forward, we hope this will be an example for others," he said. "We want it to serve as and become a template."
WHAT: Informational sessions
WHEN: 5 p.m. June 7 and 8
WHERE: June 7 at the Island Community Center at 4700 Broadway; June 8 at the McGuire-Dent Recreation Center at 2222 28th St.
How to apply
Applications will be available June 6 online at www.gedp.org or at the partnership office at Building 3311 at the Texas A&M University at Galveston Fort Crockett Campus at 5007 Ave. U.
For additional information, call the GEDP at 409-770-0216.