1. City of La Crosse Small Business Development Loan Program
Program Overview
Underwriting, Eligibility
Projects & what we learned from them
Show of hands, how many entitlement grantees here have an economic development program?

2. City of La Crosse : Population 52,306 Metro Area: 100,000 +
Confluence of the Mississippi, Black and La Crosse Rivers, Economic Growth
2017 CDBG EN: $783,207 HOME : $228,067 Annual Loan Payments: $200,000

3. 54 small businesses expand or start up. National HUD Recognition
Created over 515 new jobs.
Flexible, Tailored
Small Business Loan Beneficiary (Dublin Square)
Of these, 13 which we didn’t get paid back, one which paid us back but didn’t create the jobs.

4. Creating Economic Growth in our Downtown….

5. Our Process
Borrower sets the rate and payment schedule, maximum term is 20 years
City underwrites and keeps the loan, we collect an application fee of $250
Min. 10% equity, Up to 60% of project costs
Collateral secured at a $1 to $1 loan ratio
We prefer to fund equipment & acquisition
Collateral (UCC filing or second mortgage file), personal loan guarantee, CDBG Agreement, Loan Note
Maximum $200,000 loan
Davis Bacon does apply to projects involving construction

6. To apply Detailed project plan Business Plan
List of principal players and relationship to the business
Articles of Incorporation
Balance sheet (current)
Operating/loss statements
5-year projected cash flow
Previous year’s Federal Income Tax Returns
Copies of correspondence with two lending institutions regarding availability of funds
List of current employees and their job titles
List of Titles and Description of Projected Jobs
Cover letter with requests specific loan terms and conditions
Improvements to application- try an online application, people rarely get all of the information to us.

7. Underwriting Score Sheet
Developer equity/cash (10%)
Loan is no more than 60% total project cost
Extent to which project will provide LMI jobs
Satisfactory credit on history of all owners
Owners will to provide personal loan guarantee
Project costs are reasonable
All other sources of financing committed
Documentation of need and CDBG funds are not substituted for non-financial financing or support
Return of owner’s equity investment not unreasonably high
Debt to Coverage Ratio at least 1.25
Developed in house

8. People’s Food Coop Need: Downtown grocery store Year: 2003
CDBG Funds: $250,00 SBDL Loan
Downtown relocation, expansion
Project Total: $4.5 Million
Other Sources: WHEDA, Wells Fargo, Co-Op Member Loan
Impact: 125 jobs, triple sales volume, expansion to Rochester, community-wide
Loan rate was 3.5%

9.
Rochester
Go to 8:33
1978
Today

10. Nationally-Recognized Automotive Software Company
Need: Office expansion, downtown location
Year: 2007 and 2009
CDBG Funds: $125,00 SBDL Loan
Paid for: New data management software and equipment
Project Total: $375,000
Other Sources: La Crosse County Loan, Owner
Impact: 15 jobs to 100+ jobs
Doerflinger Store family-owned department store, eventually closed in 1984, City even owned it. They paid off their loan early. 0% interest months 1-18, 2% months 19-42, 4% months

11. Lesson Learned….
It’s never too late to celebrate the success of a CDBG project
40th anniversary celebration led to a Obama speech mention of Authenticom’s CDBG loan

12. “Recession Slump”
2012 Jade Café: $40,000 loan, one year later went bankrupt
City ended up with cars and yogurt machines
So we tried more promotion, annual roundtables, talking up our program, celebrating the old programs

13. La Crosse Wellness
Need: One-stop center for health and wellness, coffee shop, spa, day care, chiropractic, sports training, turf (30,000 sq ft)
Year: 2015
CDBG Funds: $200,000 SBDL Loan
Paid for: Equipment, acquisition
Project Total: $3.1 million
Other Sources: City TIF Financing, SBA Loan, Merchants Bank, Owner
Challenges: Environmental Assessment, 4% Equity, More time, slow to provide job creation reports
They are at year one 0% interest, years % interest. Annual interest rate.

14. That Foreign Place
Need: Downtown Expansion of existing gift shop to restaurant
Year: 2017
CDBG Funds: $40,000 SBDL Loan
Paid for: Equipment
Project Total: $70,000
Other Sources: Owner, County Loan (denied bank loan)
Challenges: “Risky Applicant”,
Follow-Up, Cut checks directly
for costs
They are at year one 0% interest, years % interest. Annual interest rate.

15. Up next- Brewery Expansion
Manufacturing steam boilers

16. Key Takeaways Micro-Entrepreneurship & TA Emphasize Job Creation
Application & Underwriting
Keeping it “in-house”
Risk versus Reward
Environmental Reviews
Tell their story