Section 108 - 2006 Economic Development Projects - Louisiana

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Business Recovery Loan Fund
New Orleans, LA
Section 108 Guaranteed Loan- $10,000,000

The City of New Orleans and its Business Recovery Loan Fund (BRLF) Agency will create an economic development business recovery loan fund to assist existing small businesses recover from hurricane Katrina. Loans ranging from $25,000 to $3,000,000 will be provided to businesses to carry out a variety of activities, which include, but will not be limited to acquisition of real property, rehabilitation, construction, acquisition and/or repair of machinery and equipment, inventory, and working capital. The loan fund will be administered by the BRLF Agency and jointly supervised by the Mayor’s Office of Economic Development and Neighborhood One. All potential business borrowers will be required to submit an application for assistance to the loan review committee of the BRLF Agency. The BRLF Agency will use Section 108 funds to purchase bank loans made to business borrowers by third party banks to relieve some of the repayment pressure on the borrowers incurred from these acquired loans.

The Community Development Block Grant (CDBG) national objective is to benefit low- and moderate-income persons through job creation and retention. This lending activity will create an estimated 250 full-time jobs and the City will require each business borrower to create or retain one full-time equivalent job for every $50,000 in CDBG assistance it receives.

The City will repay the Section 108 Guaranteed Loan over a twenty-year period, paying interest only for the first five years. The City will use payments from the business borrowers to repay the loan. To secure repayment of the guaranteed loan, the City has pledged its interest in the third party loans secured by liens on real estate, machinery and equipment, and in some case personal guaranties, as well as its CDBG funds.