AGENDA TITLE:
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Adopt a Resolution Authorizing the City Manager to Execute Amendment No. 1 to the Agreement for Professional Services with California Capital Financial Development Corporation to Provide Additional Time to Perform Marketing, Underwriting and Administration of the Lodi Hometown Microloan Program (ED)
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MEETING DATE:
November 20, 2024
PREPARED BY:
Luis Aguilar, Economic Development Director
recommendation
RECOMMENDED ACTION:
Adopt a resolution authorizing the City Manager to execute Amendment No. 1 to the Agreement for Professional Services with California Capital Financial Development Corporation to provide additional time to perform marketing, underwriting and administration of the Lodi Hometown Microloan Program.
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BACKGROUND INFORMATION:
On November 15, 2023, by Resolution No. 2023-253, the Lodi City Council approved an Agreement for Professional Services with California Capital Financial Development Corporation for the underwriting and administration of the Lodi Hometown Microloan Program. The City Council also authorized an expenditure not to exceed $450,000 to fund the program. The Agreement was for a one-year term commencing on November 29, 2023.
The Lodi Hometown Microloan Program provides business loans of up to $50,000 to entrepreneurs and small business owners with ten or fewer employees who have experienced barriers to traditional sources of capital. These loans are available to applicants located within the Lodi City limits. The Lodi Hometown Microloan Program aligns with the City Council’s Strategic Vision by providing economic growth opportunities to Lodi’s small businesses.
There are two components to the Lodi Hometown Microloan Program; a fee-based approach and a leveraged capital approach. The fee-based approach provides $340,000 in City-funded capital, with principal and interest payments contributing towards a revolving loan fund for future business loans. The leveraged capital approach provides $250,000 in capital from California Capital Financial Development Corporation’s sources.
To date, three loans have been approved to local businesses through the Lodi Hometown Microloan Program totaling $97,500 in funding. In addition to the three funded loans, California Capital Financial Development Corporation is currently reviewing three more applications for potential funding. Marketing for the program is ongoing and includes promotion through City partners such as the Lodi Chamber of Commerce, Downtown Business Alliance and Small Business Development Center, as well business walks, social media and financial workshops. Currently there is a principal amount of $242,500 remaining that is available for lending through the program.
Staff recommends execution of Amendment No. 1 with California Capital Financial Development Corporation and replacing Exhibit A, which was the approved City of Lodi Hometown Microloan Program guidelines as the original document in the contract, with Exhibit B, which is the revised City of Lodi Hometown Microloan Program guidelines, and extending the Agreement term. A key update to the program guidelines now clearly designates non-profit entities as eligible borrowers and promotes diversity within the applicant pool. In addition, refinancing of business debt is identified as an eligible activity under the loan policy. This will allow borrowers to reduce their liabilities with a lower interest rate and as result, have more working capital to inject back into their business. Finally, the loan term was updated to five years, making it consistent with the intent of the program as referenced throughout the guidelines.
STRATEGIC VISION:
2B. Economic Development: Expand and diversify economic opportunities.
FISCAL IMPACT:
Funds are available in the FY 2025 Community Program Fund operating budget.
FUNDING AVAILABLE:
Account No. 36510102.75028
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Scott R. Carney
City Manager