MONROE - The City of Monroe Revolving Loan Fund (RLF) Committee made its first direct loan - without a bank participating - at a meeting Wednesday.
Committee members approved a $50,000 loan for Northside Grill, a bar and dining facility proposed for the downtown Square. The loan is to finance equipment and working capital.
The Common Council is expected to consider final approval of the loan Feb. 16.
Loan applicants, Joey and Laura Winters of ABC Ventures LLC, Monroe, declined to comment about the loan until after the council vote.
This is the first loan the RLF committee has approved since September 2008, and it is the first loan made directly to a business without bank participation since the loan fund was established and made its first loan in 1998.
Michael Boyce, RLF committee member and council alderman, is in favor of approving the loan.
"If we create two $20,000 jobs, then we have met the purpose of the revolving loan fund," he said.
The credit analysis required for the loan was done by Woodford State Bank, but the bank is not participating in the loan agreement.
The loan agreement calls for the city to have a first lien on equipment and a second lien on the building at 1609 10th Street. The loan is for a 7-year term, and the interest is 3 percent.
Payments on interest and principle are deferred for 12 months, but interest accrues during that period.
The Winters had matching funds and made personal guarantees to qualify.
The council granted Northside Grill a Class B liquor license on May 18, 2010. The Winters deferred issuance of their license for six months, as allowed under city ordinances, and picked up the license Nov. 15, 2010. The Winters plan to remodel their building for the restaurant and lounge. According to "use it or lose it" stipulations in city ordinances, the Northside Grill, with a Class B license, can be closed for a maximum of 120 consecutive days and must serve alcohol not less than 25 percent of the days in any license year, without losing the license.
The city has used bank participants since the revolving loan fund was established.
Monroe's is one of the few revolving loan funds in the state that has bank participation, according to City Attorney Rex Ewald. Bank participation was originally included in Monroe's RLF structure to facilitate the lending, administrating and monitoring process for the loans.
The Monroe Revolving Loan Fund for business start-ups and expansions was established through the Wisconsin Department of Commerce Community Block Grant Program. Interest earned from repayments are added to the fund for future loans.
As of Sept. 30, 2010, the city's revolving loan fund balance was $677,000.
The fund had 20 loans active between April 1 and September 30 of 2010, totaling $1.5 million. The loan amounts ranged from $18,000 to $250,000. Two of the loans have since been paid off.
Three of the loans, two from 2008 and one from 2004, are the only loans that have defaulted, and all had bank participants. The amount owed to the city from the defaulted loans, $119,000, is 8 percent of the total value of the active loans. The Revolving Loan Fund Committee voted in December to write off $16,000 from the 2004 loan.
Committee members approved a $50,000 loan for Northside Grill, a bar and dining facility proposed for the downtown Square. The loan is to finance equipment and working capital.
The Common Council is expected to consider final approval of the loan Feb. 16.
Loan applicants, Joey and Laura Winters of ABC Ventures LLC, Monroe, declined to comment about the loan until after the council vote.
This is the first loan the RLF committee has approved since September 2008, and it is the first loan made directly to a business without bank participation since the loan fund was established and made its first loan in 1998.
Michael Boyce, RLF committee member and council alderman, is in favor of approving the loan.
"If we create two $20,000 jobs, then we have met the purpose of the revolving loan fund," he said.
The credit analysis required for the loan was done by Woodford State Bank, but the bank is not participating in the loan agreement.
The loan agreement calls for the city to have a first lien on equipment and a second lien on the building at 1609 10th Street. The loan is for a 7-year term, and the interest is 3 percent.
Payments on interest and principle are deferred for 12 months, but interest accrues during that period.
The Winters had matching funds and made personal guarantees to qualify.
The council granted Northside Grill a Class B liquor license on May 18, 2010. The Winters deferred issuance of their license for six months, as allowed under city ordinances, and picked up the license Nov. 15, 2010. The Winters plan to remodel their building for the restaurant and lounge. According to "use it or lose it" stipulations in city ordinances, the Northside Grill, with a Class B license, can be closed for a maximum of 120 consecutive days and must serve alcohol not less than 25 percent of the days in any license year, without losing the license.
The city has used bank participants since the revolving loan fund was established.
Monroe's is one of the few revolving loan funds in the state that has bank participation, according to City Attorney Rex Ewald. Bank participation was originally included in Monroe's RLF structure to facilitate the lending, administrating and monitoring process for the loans.
The Monroe Revolving Loan Fund for business start-ups and expansions was established through the Wisconsin Department of Commerce Community Block Grant Program. Interest earned from repayments are added to the fund for future loans.
As of Sept. 30, 2010, the city's revolving loan fund balance was $677,000.
The fund had 20 loans active between April 1 and September 30 of 2010, totaling $1.5 million. The loan amounts ranged from $18,000 to $250,000. Two of the loans have since been paid off.
Three of the loans, two from 2008 and one from 2004, are the only loans that have defaulted, and all had bank participants. The amount owed to the city from the defaulted loans, $119,000, is 8 percent of the total value of the active loans. The Revolving Loan Fund Committee voted in December to write off $16,000 from the 2004 loan.