Mad River Union
HUMBOLDT – In a first-time effort, the county is helping lower-income entrepreneurs build up their micro-businesses and become eligible for loans.
The Board of Supervisors approved new guidelines for micro-enterprises at its Dec. 9 meeting. Funded through the state’s Community Development Block Grant (CDBG) program, the county’s micro-business assistance comes in two forms.
Technical assistance grants help develop businesses to the point where they can enter a more advanced phase – receiving loans of up to $50,000 for expansion.
This type of combined assistance has never been done in the county before, said Paula Mushrush, the county’s housing and grants coordinator. The loan program’s focus is on lower-income entrepreneurs – those earning 80 percent or less of the county’s median income level – who have less than five employees.
As an example, Mushrush told of a man who employed three people in a street sweeping company that he wanted to expand. “That’s the type of thing that we would be interested in doing,” she said.
Unlike other CDBG business loan programs, the assistance isn’t conditioned on adding more workers. The first phase would involve grants of up to $10,000 for technical and business planning assistance. Then the county would help “with the process of getting a loan,” Mushrush continued.
Answering a question from Supervisor Virginia Bass, Mushrush said the combo program is well-suited for people who are trying to start so-called “cottage industry” businesses out of their homes.
The county has had a business loan program for many years but Mushrush said the last time a loan was awarded was in 2002. Supervisor Virginia Bass was pleased to see the dual-phased program’s launch.
“It’s been 12 years that we’ve done this so it’s nice to see that we’re able to start getting involved again,” she said. “We talk about economic development and these may be small opportunities but if we haven’t been offering them, it seems like a good way to move forward.”
But Mushrush advised that the program also carries some risk. She said that “the scary thing for your board” is that the state will be amending its CDBG guidelines to meet federal law.
The CDBG program is funded by the federal government, with local allotments administrated by the state. According to federal law, “If you make a loan to a private individual and it goes south, you have to pay it back with something other than CDBG funding,” Mushrush said. “That’s a federal law that the state has ignored – but they’re now taking money back from people.”
Supervisors weren’t discouraged by the liability potential, however, and unanimously approved the guidelines for the new program.