Office of the City Manager
Reference: Amended Colorado Enterprise Fund Revolving Loan Fund Agreement
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Robin Martinez, Director Brighton EDC
Date Prepared: 10/3/23
PURPOSE
To obtain Council approval for the amended Colorado Enterprise Fund (CEF) Revolving Loan Fund (RLF) Agreement.
STRATEGIC FOCUS AREA
Economic Development - Brighton Business Services
BACKGROUND
In April of 2020, the Council approved a resolution to implement the COVID-19 Relief Fund program to support businesses impacted by COVID-19 and to create an additional bridge funding mechanism for Brighton businesses. The Council allocated $500,000 to fund the RLF match program with CEF, CEF matched the City funds and after administrative fees and services were deducted, the loan program funds $850,000 in revolving loan funds for Brighton businesses.
Once borrowers repay their loan, the money replenishes the pot for the next Brighton business to attain. This program provides an alternative to traditional bank lending/gap funding mechanism for businesses in need of working capital, business improvements, startup and expansion loans. The program has sat dormant the last couple of years, but the EDC office would like to relaunch the program and market it to the Brighton business community once again. Bank lending terms are still very stringent, and many small businesses face challenges when qualifying for business loans.
Currently there are 16 active loans in the repayment phase totaling $321,308. The program has $528,692 available to lend.
Before relaunching the program, CEF is requesting an amendment to the agreement to align the terms and guidelines of the original Brighton COVID-19 RLF agreement, with their current terms and agreements they have with other partner loan programs. The modifications will help to streamline the processes and operations of the program.
Highlighted Changes to the agreement:
a. Changing
i. Loan Losses to CEF only (from shared pro rata in fund)
ii. At least 1:1 match on ALL loan capital grants (from 10% match on COVID loan capital grant)
iii. No max loan amount (from $25-$50k max amt previously) so CEF can have flexibility in lending capital based on business needs without triggering compliance/reporting issues. We still anticipate closing an average loan amount <$50k.
iv. In Attachment A: Requesting agreement/acknowledgement that CEF's standard loan products and services, standard underwriting and approval and standard servicing and asset management, be agreed to. Helps us streamline operations without compliance/reporting issues.
OPTIONS FOR COUNCIL
Approve the amended agreement as is.
Suggest alternative amendments to the agreement.
Deny the amended agreement and dissolve the program.
FINANCIAL IMPACT
N/A
STAFF RECOMMENDATION
Approve the agreement as is.
ATTACHMENTS
Resolution
Original signed agreement
Current amended draft agreement
Recent Quarterly Report on the program status.