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Thread: Promoting neighborhood businesses via financial incentive programs

  1. #1
    Member
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    Jul 2005
    Location
    Chicago, IL
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    Promoting neighborhood businesses via financial incentive programs

    I was wondering if anyone on this forum might be able to help me out. In my role as a city council member in Urbana, I am hoping to create a mini-grant/loan program for our community to give a boost to neighborhood businesses (of which we have few) and to help spark new neighborhood businesses. I'm looking for model ordinances, research, historical information, etc to help me in this effort. I need stuff that will help me actually craft and ordinace and program outline, and also factual talking points to help convince fence-sitters.

    I am looking to use this program for truly neighborhood businesses
    (zoned here as B-1) (we already have a newly expanded and revamped
    downtown redevelopment program I just help pass two weeks ago), and
    to help spark new truly neighborhood businesses (a week ago we
    approved a "neighborhood business that was a video store of 7,000
    feet, 49 parking spaces, and 50 sq feet in signage). This is not
    really my idea of neighborhood business, so I'm looking for legal
    ways to keep square footage in line with surrounding neighborhoods,
    bypass tradition/current parking requirement to focus more on
    bike/stroller parking and walkers, etc.

    For the grant/loan programs, I'm looking to do a no- or low-interest
    loan program through a local bank, coupled with a grant incentive
    program using economic development fund monies or general fund monies. The grant incentives would be based on perhaps some of the things I listed above (true "neighborhood business" characteristics").

    Can anyone of the forum help me? Thanks!

    Laura Huth
    Council member, Ward 5
    City of Urbana

  2. #2
    Cyburbian Cardinal's avatar
    Registered
    Aug 2001
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    The Cheese State
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    Ours is a CDBG-based low-interest "Micro-Loan" program that can be applied to anything, but was really intended to foster business start-up, expansion, or purchase in the downtown. That is largely how it has been used, at times coupled with our facade loan program. The same is true of our commercial enterprise loan program, which usually focuses on larger businesses. We have used these for many types of business - a travel agent, a chiropractor's office, a dentist, restaurants, a bike shop, a car dealer, a bakery, an more. So far we have had only one failure, a loss that we expect to be about $6,000. On the other hand, we have loaned about $250,000 at interest rates from 2 to 8 percent (now all loans are fixed at 4%). I would advise not being too strict on your definition of "neighborhood" business. A video store, for instance, serves a neighborhood, but may need to be a certain size to be economically viable. The most important consideration to us in evaluating a loan application, once deciding that a business is desired, is the business plan.

    You can view a copy of our loan manual at www.cityofwhitewater.com. It will be in the resource library.

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