OGDEN -- The city council adopted a resolution Tuesday night that officials say will provide a boost to new small-business owners.
The resolution is included in the city's five-year consolidated plan and creates a Community Development Block Grant-funded "loan loss" program aimed at promoting business development by leveraging grants to secure loans from larger loan pools that could then be given to small businesses.
Terrence Bride, assistant business development manager for Ogden, said the loan program is needed to provide otherwise viable small businesses with loan options when traditional loan and investment opportunities aren't available.
Bride said some new small businesses have a difficult time securing loans and funding for expansion, investment and operating capital.
The program would fill a "funding gap" that comes when a business is still so new it can't meet certain loan requirements. Filling that funding gap would allow the businesses time to grow and provide and retain jobs in the community.
"Capital leads to job creation," Bride said. "This will provide a significant increase in the city's potential to create jobs."
The new program would use block grant loans to secure loans that would be issued by Ogden Reinvestment Corporation. An initial amount of $305,000 would come from the sale of six CDBG-funded small-business loans.
The funds would be used to provide a 10 percent security backing for loans issued by ORC to small businesses. The loan pool available to ORC contains $3 million and comes from the Ogden Industrial Development Corporation.
The goal of the program is to take the $305,000 initial investment and leverage that money to secure $3 million in loans that would then be available to the business community.
Bride said the program is for all of Ogden but is specifically aimed at the downtown area.
The loans would be paid back to the city, but Ogden does assume some risk because of the possibility of loan defaults.