The Park Rapids Economic Development Authority board, comprising members of the city council, had a workshop Tuesday to discuss a draft policy for using the city’s Revolving Loan Fund (RLF).
Sarah Linda, a business loan specialist with the Headwaters Regional Development Commission, explained that the city accepted a “one-time exception” offered by the Minnesota Department of Employment and Economic Development (DEED) to return 20 percent of the city’s Minnesota Investment Fund (MIF) dollars to the state, in return for being freed from DEED restrictions on how these funds can be used.
Linda said the remaining MIF money kept by the city totals $441,671, while there is also a pool of approximately $163,000 in Urban Development Action Grant funds in the city’s RLF that require separate accounting. These funds can be used to provide loans to eligible businesses to stimulate economic growth and diversification.
The draft policy describes the RLF’s objectives, guiding principles, eligible and ineligible projects, the lending area (within city limits or an area the city plans to annex), acceptable uses of loan funds, loan amounts and terms, interest rates and security, etc.
EDA board member Tom Conway raised several questions about the draft policy, including the need for a more precise definition of “agriculture” regarding ineligible uses, and scenarios where a loan might be secured with a personal guarantee or with life insurance.
Board members also discussed whether the loans should be available to businesses outside city limits, and they considered examples of governmental units that could also apply for a loan.
City Planner Andrew Mack brought a number of suggested rewrites and additions to the policy. In order to have all eyes on the latest version, further discussion of the RLF policy was set aside for a future workshop.