Owners of the smallest businesses in the Town of Tonawanda could be eligible for low-interest loans under a program approved last week by the Town Board.
Businesses must have five or fewer employees and be owned by a low- to moderate-income person, or hire low- to moderate-income employees. A low- to moderate-income household is defined as up to $37,900 for one person, and up to $62,800 for a six-member household.
“We’re not in the business here to compete with local commercial lenders,” said James D. Hartz, the town’s director of planning and development.
“This is filling in those gaps where the small-business owner is having trouble finding financing to keep their business open or operational or expand in the town.”
The minimum loan amount is $10,000, while the maximum will be determined by the town’s Loan Review Committee. Most loans will probably be around $30,000 but could go as high as $60,000, Hartz said.
Interest rates are set at 75 percent of the Wall Street prime rate, which works out to 2.44 percent right now, Hartz said. “It’s a very attractive rate,” he said.
Town officials will review applicants’ business plans and ensure that they can repay the loans over five to seven years. Applicants must also be current on their taxes. Not-for-profit organizations are not eligible to borrow.
“The whole purpose of the program is to provide those business owners and the residents of the town an opportunity to stay here to work,” Hartz said.
The town has $250,000 available from the U.S. Department of Housing and Urban Development for the program. The town last made a loan through a small-business lending program in 2003 to Great Lakes Orthodontics, but grant money dried up, Hartz said.
“We found an opportunity to at least bring back some economic-development programs for the smallest businesses in town and rejuvenate this program,” he said.
For more information, business owners are asked to contact Hartz at 871-8847, ext. 1.