On April 7, 2014, the Village Board formally approved the Zero Interest Loan Program.  This program is designed to provide loans of up to $10,000 to new or expanding businesses.  It is also available to property owners looking to make improvements. Funding for the Program is via a 10% reimbursement from Class 6b tax abatement approvals.  At the April 7, 2014 Village Board meeting, Charles Witherington-Perkins, Director of Planning & Community Development, noted that “Staff will need to bring any interested party forward as the program will need a budget amendment in order to process the loan.  It will be twelve to eighteen months before money will come into the fund.” (Village Board Meeting Minutes, 4/7/14) 

The goal of the Program is to encourage new businesses to locate to the Village and help existing businesses grow and thrive. The Zero Interest Loan Committee has reviewed three applications since the Village Board approved the program.  This is the first application that has been recommended for approval by the Loan Committee.

Kingsley + Ginnodo Architects has requested an interest-free loan in the amount of $10,000 per this Program to grow their small business.  The architecture firm has been operating a home-based business for the past several years, but is moving into a commercial office space at 33 N. Hickory Avenue.  The Zero Interest Loan Committee, composed of Village Staff and Arlington Economic Alliance members, has conducted a comprehensive review of the application and complementary documentation provided by Kingsley + Ginnodo Architects.  The Loan Committee has evaluated the business plan, credit worthiness, and collateral to secure the loan, and is recommending approval of the loan request. 

The loan will be used primarily toward the purchase of furniture and equipment.  Additionally, the architecture firm plans to create one or two new positions during the life of the loan. If approved, the $10,000 loan will be disbursed in total. It will be repaid by the borrowers, with no interest, in quarterly installments beginning three months from disbursement, over the next five years. The loan will be secured against real estate collateral. 

The primary funding mechanism for the Zero Interest Loan program is a rebate to the Village of 10% of the savings received by Cook County Class 6b property tax abatement recipients over a five-year period.  In 2014, the Village Board approved two Class 6b incentives.  However, as the abatements for both of last year’s applicants have not yet gone into effect, the Village has not received the appropriate tax figures and will not receive the agreed-upon rebates until the assessments are finalized.  Therefore, a budget amendment in the amount of $10,000 is required to fund this particular Zero Interest Loan request.  This would entail a transfer from General Fund reserves to the Zero Interest Loan Program account. 

RECOMMENDATION

It is recommended that the Village Board approve a budget transfer of $10,000 from the General Fund contingency account to the Zero Interest Loan Fund Program expenditure account #100-4001-521-40-43.