The City of North Port rolled out another welcome mat for small businesses with the launch of its Small Business Revolving Loan Guarantee Fund.

"The loan guarantee fund will help existing North Port small businesses to expand, assist out-of-town business operators who relocate in our city, and support entrepreneurs who are investing in North Port’s future,” said City of North Port Economic Development Manager Allan Lane.

The City Commission unanimously approved a resolution creating the fund “to create opportunities that support business retention, expansion, recruitment, and growth.” The initiative is designed to create jobs, stimulate economic activity, and increase tax revenues for the City. The program will improve the City’s business-friendly environment and its potential for growth. The City of North Port capitalized the fund with $100,000 which was matched by Sarasota County.

Applicants must be for-profit businesses located, or looking to relocate, in the City of North Port, or new graduates of the City’s Small Business Technical Assistance Program. They must show that they have been unable to secure traditional types of financing, but can prove that they have the training, education, and resources to be successful business operators. Local banks underwrite the loans that are guaranteed by the City of North Port, reducing the lender’s risk.

Access to a variety of financing sources is critical to small business operators. According to the Small Business Administration, the nation’s 23 million small businesses create 75 percent of the nation’s net new jobs and employ half of all private-sector workers. Each year, more than 500,000 small businesses with employees are created. However, small businesses suffer a 50 percent failure rate within the first five years of start-up. The primary reason: lack of sufficient capital.

Loan Must Create Jobs and Capital Investment

The business plans of fund applicants must show how the loans will create capital investment and job growth in the City of North Port, and positively impact the City’s economy.

Loan proceeds can be used for the purchase of real estate, equipment, and other business assets, such as inventory; the construction of a new facility or expansion of an existing facility; acquisition of a business or business assets; and working capital for contracts, account receivables, or special projects.

Entrepreneurs can use the loan to support commercialization of emerging sustainable growth and energy technologies, products and services.

Types of Loans, Guarantee and Interest Rates

The fund will guarantee loans up to $50,000 (minimum $10,000) for a maximum term of three years. The fund will guarantee fixed-rate, term loans that can be funded in full at closing or in installments throughout the term of the loan. Amortization periods up to 20 years will be determined by collateral, cash flow needs and terms offered by the servicing bank.

Loan interest rates will not exceed the 11th District Cost of Funds Index (COFI), plus 6.0 percent per annum, plus an annual bank margin of up to 1.5 percent. To replenish the fund, servicing banks will pay the fund an annual guarantee fee of 6 percent of their loan volumes.

Loan Administration Committee

The fund’s Loan Administration Committee is responsible for loan guarantee decisions. Its seven members, appointed by the North Port City Commission, are qualified professionals from North Port’s business and lending community: a lawyer, an accountant, a Sarasota County staff member, a Business and Economic Development Board member, two bankers, and a City of North Port staff member.

Committee members, including two alternates, serve one-year terms renewed at the City Commission’s discretion. Lane will coordinate the management of the fund.

To assess the success of the fund, the lending banks, the Economic Development Division, and the Loan Administration Committee will annually track data, including: jobs created and retained, new sales, public and private investment, the number of businesses assisted, loan guarantees funded, estimated taxes generated and employment data.

For More Information

For more information about the City of North Port Revolving Loan Guarantee Fund, contact Allan Lane, Economic Development Manager, City of North Port, at 941-429-7001 or via email at alane@cityofnorthport.com.