PROGRAM: Created within the Cincinnati Small Business Loan Fund in order to provide capital for fixed assets and working capital to small businesses located in the City of Cincinnati. The purpose of the “MicroCity Fund,” is to encourage the expansion and increase the capacity of small business by providing “gap” debt financing and access to technical assistance. Funding is available to successful growing or qualified emerging small businesses. Loans made from this fund are administered and serviced by Greater Cincinnati Microenterprise Initiative, Inc. (GCMI), with input and direction from the City of Cincinnati and Planning Staff.
Each loan must meet one of the eligible activities stipulated in the CDBG Entitlement Program Regulations 24 CFR Part 570 and detailed in part VII Project Eligibility of these Guidelines. Each loan must also meet one of the following National Objectives as mandated by the CDBG program:
1. Job Creation/Retention: Funds are used to finance businesses, which create or retain permanent jobs, the majority of which are filled by Cincinnati residents from low to moderate-income households. In the case of job creation, at least 51 percent of new jobs created must be filled by individual from low to moderate-income households as defined by HUD. In the case of job retention, either 51 percent of the retained jobs or 51 percent of refilled turnover positions must be filled with individuals from low to moderate-income households. The business must maintain on file, and submit to the City as required, an Income Verification Form for each employee hired meeting the low or moderate-income criteria. In case of jobs are to be “available to” low to moderate income person(s), the assisted business must take such actions as the City deems appropriate to insure that low and moderate income persons receive first consideration for filling such jobs.
2. Low-Moderate Income Area Benefit: funds are used to assist projects, which provide or expand the availability of goods and services to an area with a majority of low to moderate-income residents.
3. Prevention/Elimination of Slum and Blight: funds are used to assist rehabilitation of structures in a blighted area undergoing comprehensive revitalization in accordance with an urban renewal plan or to rehab structures determined to constitute “spot blight.” Spot blight is conditions determined to be public health or safety hazards. Assistance may be for acquisition, demolition or rehabilitation financing.
PROGRAM GOAL: To encourage the expansion and increase the capacity of small business by providing “gap” debt financing and access to technical assistance.
TYPE OF ASSISTANCE: Loan funded by GCMI
TYPICAL STRUCTURE: The financing structure for each loan may vary based upon each applicant’s request. Typically financing shall not exceed 90% of the funds needed to finance a project. The remaining balance must consist of private sector financing, with at least 5-10% owner equity. The loan is made only when the applicant is able to demonstrate the ability to repay the loan in a reasonable period of time.
MAXIMUM AMOUNT: MicroCity Loans cannot exceed $35,000 per business.
REPAYMENT/ RATES/ FEES:
1. Principal and interest payments are made on a monthly basis
2. Deferred principal and/or interest payments may be considered if necessary to make financing feasible.
3. Interest ratesfor MicroCity Loans shall be fixed and be equal to the prime rates as published in the Wall Street Journal, in effect at the beginning of the first day of each fiscal quarter
4. The maximum term for the MicroCity Loans will be 7 years
5. Loans may be repaid in full at any time without pre-payment penalty
6. For each loan, GCMI may charge closing fees and any customary out of pocket fees. GCMI will service each loan from the MicroCity Loan Fund.
INCENTIVES: Loans provided toencourage the expansion and increase the capacity of successful growing or qualified emerging small business by providing “gap” debt financing and access to technical assistance.
BENEFITS: The program provides a benefit for small businesses who create jobs, provide a low-moderate income area benefit, and prevent/eliminate slum and blight.
ELIGIBILITY: Business Ownership: For-profit business enterprises located within the City limits of Cincinnati are eligible to apply.
Business Size: Borrowing entities must meet the Federal Small Business Act definition of a “Small Business.” For most businesses, this means average sales over the past three years of less than $5 million and fewer than 100 employees. Certain industries may exceed these guidelines (e.g., construction and wholesaling) and still be a “Small Business” as defined by the Act.
ELIGIBLE/INELIGIBLE USES:
Eligible Uses- Working capital (inventory, receivable, contract financing and operating capital), building and/or land acquisition, construction and/or renovation and equipment.
Ineligible Uses - Loans to social service agencies that provide for the care and/or rehabilitation of people, religious institutions, or other non-profit service providers; Refinancing existing debt; Venture capital investments; Loans to private clubs with restriction on membership or patronage; Loans prohibited by any City Administrative Regulation, local, state or federal law
APPROVAL: Greater Cincinnati Microenterprise Initiative, Inc., with input and direction from the City of Cincinnati Department of Community Development and Planning Staff is the approval authority for all MicroCity Loans.
Applicants must complete a loan application and submit all business financial and business background information. This information is necessary to determine if the applicant meets the eligibility requirements of the program and can repay the proposed loan.
1. Applicant submits application with required financial statements and business and/or personal documentation.
2. City staff (Development Officer of his/her designee) pre-screens the application for eligible location, CDBG national objectives, reviews financials and business documentation as provided for completeness and schedules a site visit to the business.
3. GCMI staff performs necessary financial analysis, verifies credit information of all applicants, requests additional documentation as needed and completes the loan summary and credit write-up for review to the GCMI Loan Committee and City’s Development Officer or his/her designee.
COMMITMENTS: Any material change in the financial condition of the applicant, collateral or the guarantor may result in the commitment being withdrawn. MicroCity Loans shall be closed within 30 days of loan approval.
Download Application
Download Fact Sheet
Contact: Gerald Fortson, Development Officer
Phone: (513) 352-1926
Fax: (513) 6257
gerald.fortson@cincinnati-oh.gov
