Published On: Wed, Feb 20th, 2013

Rules on city revolving loan funds are changing

LAUREL —New State requirements are forcing the City of Laurel to make changes in its revolving loan funds.

City Council members voted to have the Northeast Economic Development, Inc. (NED, Inc), which is a non-profit development organization, manage close to $20,000 that is in the city’s revolving loan funds.

NED, Inc works through the Northeast Nebraska Economic Development District (NENEDD) out of Norfolk.

Holly Quinn, a Business Loan Specialist with NENEDD attended the Feb. 11 Council meeting and talked about the options that are available.

In May of 2012 all municipalities received a letter from the State concerning the revolving loan funds according to Quinn.

The NE Dept. of Economic Development has stated all Federal rules will have to be followed. The DED recommends the revolving loan funds should be administered by an entity certified to work with Community Development Block Grant funds.

Municipalities were also informed penalties could be applied if the Federal guidelines were not followed.

Since the first letter was sent out the State continues to change directives and has warned of pending penalties but has not established any penalties.

“The State has been clarifying the rules on a regular basis through this whole process,” Quinn said.

Laurel City Council members had three options to choose from:

• Return all of the revolving loan funds to the State

• Pool the city’s funds with NED, Inc. regional revolving loan funds

• Keep the funds and contract with  NENEDD or an CDBG certified   individual to administer the funds.

“The funds will be monitored by the state no matter which option you choose,” Quinn said.

If Laurel’s revolving loan funds are managed by NENEDD the city will have access to additional funds. Through NED, Inc the funds are de-federalized which will eliminate most of the federal requirements.

In order to qualify for a loan through NED, Inc. jobs have to be created and maintained, Quinn said.

Interest rates through NED, Inc. will run between five to six percent.

Laurel Council members will give their approval on future loans and NENEDD will manage the loan fund.

Luke Virgil, Economic Development Coordinator for Laurel, recommended the city work with the NENEDD.

“I don’t have the training to administer the funds. I would recommend we work through NENEDD,” Virgil said.

“This has been a great program over the years. The revolving loan program has helped a lot of businesses,” Councilman Keith Knudsen said.

The City currently has three active loans involving revolving loan funds.