A new program, expected to start next year, will offer small businesses in Lancaster’s CRIZ access to loans and grants. EDC helped chair the task force for this initiative.
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By the start of next year, a new program is expected to be in place offering access to loans and grants for small-scale owner-operated businesses in Lancaster’s CRIZ.
The board of the authority that oversees the CRIZ — short for City Revitalization & Improvement Zone — voted Tuesday to set up the program.
Grants would be up to $25,000 and loans would be up to $100,000. Projects would have to meet all state CRIZ requirements and their backers would have to provide $1 in matching funds for every $5 of CRIZ funds.
The initiative accomplishes a goal of city and CRIZ officials, who have said it’s essential to make the program available to small entrepreneurs.
Small-business owners included in the CRIZ when it was created in 2013 have complained that it requires them to fill out extra paperwork every year, without offering them any direct benefit.
“This is so badly needed,” CRIZ board member Gerald Simmons said, predicting a strong positive reaction from Lancaster’s minority communities.
It’s the strength of the CRIZ program to date that makes its extension possible, Mayor Danene Sorace said.
Marty Hulse, the owner of Building Character and Madcap & Co., leads an association of merchants in and around the 300 block of North Queen Street. He called the prospect of the loan program “fantastic news.”
The block was taken out of the CRIZ recently, to free business owners from the burden of annual reporting. But in light of the new program, there might be interest in revisiting the issue, and perhaps adding some properties back, Hulse said.
How it will work
The program will follow guidelines laid out by a task force set up last year. State officials must sign off on the plan before it can be implemented.
The grants and loans will be financed through a bond, allowing them to be made year-round. That differs from conventional CRIZ allocations, which have to be made in a short time window each year after the state transfers money to the authority.
Recipients could use their funding to acquire, expand or renovate a business. The authority will expect them to show that economic benefits will result from the investment: “reasonable” CRIZ revenue and the creation or preservation of livable-wage jobs.
The city will most likely evaluate wages based on MIT’s Living Wage Calculator, said city director of economic development and neighborhood revitalization Randy Patterson.
For loans, the CRIZ will typically match the interest rates offered by the state’s small-business loan programs. Businesses would have to provide collateral and demonstrate their ability to repay the debt.
City staff will review and evaluate applications. The guidelines say the CRIZ authority will make the final decision on loans and grants; Patterson said the authority’s board could choose to delegate some or all approvals to the CRIZ finance committee, which consists of three board members, or allow city staff to make awards up to a certain dollar amount.
What’s essential is having enough flexibility to make timely decisions for applicants, he said.
The resolution approved by the authority board calls for a $5 million bond to finance the program, but the amount is subject to change, Patterson said.
The authority may be able to borrow the money on its own, he said. If not, it would ask the city to act as guarantor, a role it could take on with City Council authorization.