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HomeMy WebLinkAbout05-00132 Backup DocumentationStatus Report RE: Grow Miami Fund Loan Application Submittals & Technical Assistance At the January 31, 2005 board meeting, Chairman Winton directed the Executive Director to follow up on the small businesses that have been referred to micro -lenders or other entities and return to the Board a status report at the following meeting. The following is a current status update, as well as historical background. PROCESS OF REVIEW... All applications must be submitted to the Community Redevelopment Agency (CRA) for preliminary review. The CRA reviews the packages for boundary compliance and conformity with the Southeast Overtown Park West (SEOPW) and Omni Development District CRA comprehensive plans. Loan packages are then forwarded to the Grow Miami Fund (GMF) loan officer assigned to the district office in New York for underwriting. During underwriting, the loan officer may request additional documentation from the borrower to support the loan. Upon conditional approval, the loan officer takes the loan to the GMF loan committee, a finance panel of executive level associates, for final approval. If and when the borrowers are in agreement with the terms and conditions of the approved loan, GMF will submit a request to Community Development (CD) for disbursement of funds prior to closing. CRA remains in constant communication with GMF in order to monitor the status of each application. GROW MIAMI FUND PROGRAM... The agreement between SEOPW CRA and National Development Council's Grow America Fund, Inc. was executed May 5, 2004. However, since October 2003, the CRA has engaged in advertising the GMF via the CRA's quarterly newsletter, public workshops, client referrals, and word-of-mouth. GMF and CRA staff have met with each potential borrower to explain the program, the eligibility criteria and documentation requirements. All interested parties were provided a preliminary loan application. To date, the CRA and GMF have met with over 50 entities, representing existing business owners, entrepreneurs, real estate investors, community development corporations, board members' staff and other civic organizations. These meetings have led to the submittal of 14 applications. Of the 14 applications submitted for consideration, three (3) were deemed viable projects by the GMF program and were processed for underwriting (Comer Muse, Inc.; Blu Moon Restaurant and Players). The remaining applications were contacted and referred to the following entities for loans and/or grants, as applicable: Small Business Administration City of Miami Grants Department Accion Miami -Dade County's Mom & Pop Grant Program Micro -business USA 1 TECHNICAL ASSISTANCE.... On February 10, 2005, the CRA sent letters to all persons who expressed interest in the GMF and for whatever reason did not participate, referencing free business resources available to businesses and entrepreneurs in the CRA area. The letter spoke of the collaborative effort of the CRA, Florida Memorial College (FMC), Miami Dade College (MDC) and the Overtown NET Office to provide technical assistance in the form of instructional workshops and one-on-one training sessions by the respective colleges —for no charge. (Both colleges have established entrepreneurial programs to provide technical assistance to existing business owners and proprietors to help start or expand their business.) CRA is helping to coordinate the next workshop date, tentatively scheduled for March 2005. LOAN APPROVALS/DECLINES... In December 2004, the CRA issued its first business loan under the Grow Miami Fund to Comer Muse, Inc. --a European inspired cafe/consignment store at the peak of the Omni CRA. The $65,000 loan funds will be used to purchase equipment, leverage working capital dollars and to hire four (4) new full time positions. A grand opening has not yet been scheduled. Blu Moon, an upscale full service dining restaurant located within the DoubleTree Grand Hotel of the Omni CRA, submitted an application for $448,000 in June 7, 2004 where it was determined additional financial documentation was required for underwriting, including past two years financial statements. The funds were to be used to secure equity expended due to leasehold improvements, equipment and inventory purchases. After several meetings and phone conferences over the course of six months, no additional paperwork was provided. The file was closed 12/31/04 due to inactivity. Blu Moon has since used owner financing to construct and build out restaurant space and is currently pending a certificate of occupancy to open. Players, a sports bar and grill located within the heart of the Entertainment District in the Park West neighborhood, submitted an application for $275,000 in late December 2004. GMF initial underwriting criteria declined the loan request based on poor credit history by the co -borrower. However, GMF counter -offered the request by offering a preliminary approval on the primary loan applicant using his existing owned property, besides Players, as collateral. The borrower accepted the counteroffer. The application is currently being reviewed by GMF underwriting. As a result of our many meetings with the area businesses and community leaders, we are aware that a number of loan applicants were placed on hold pending submittal of requested documentation. Some businesses may not have been fully prepared to participate in the GMF program for various reasons (i.e. incomplete business plans, unsubstantiated financial data, and/or simply the inability to compose all documentation requested in the GMF application form.) Other loan applications were deemed ineligible by the GMF loan committee due to insufficient collateral or failure to substantiate proof of the ability to repay the requested debt amount. These issues justified the need to provide more hands-on technical assistance to businesses to ensure their success within the redevelopment areas that the GMF program did not allow for. 2 This new collaborative effort with Florida Memorial College and Miami Dade College through the Overtown NET office will provide technical assistance in the form of instructional workshops to address many of these issues. Both colleges have established entrepreneurial programs to provide technical assistance to entrepreneurs to turn business ideas into reality as well as providing assistance to existing business owners and proprietors seeking to expand their businesses and needing financial assistance. The CRA will coordinate a free Business Assistance Workshop hosted by FMC, MDC and the Overtown NET office to be scheduled in March 2005. In addition, all applicants who were not able to participate in the GMF program were given contact information to speak with FMC and MDC representatives directly. The CRA is aggressively pursuing all leads in terms of securing additional applicants, as well as aiding business owners with technical assistance in order to provide them with the tools to successfully complete or continue their business. 3