Boulder’s $1 million loan pool close to reality

BOULDER – Two Boulder banks have kicked in $100,000 each to help Boulder businesses buy their buildings.

Wells Fargo and First National Bank of Boulder have put their money where their mouths are to help grow and retain Boulder businesses as part of the $1 million loan pool, an element of the city of Boulder’s business incentive program.

The city is contributing $300,000 to the loan pool. Another $700,000 must be raised from area banks to make the loan pool work, said Frances Draper, director of the Boulder Economic Council, the group that developed and is charged with fostering the city’s economic vitality effort.

Chase is reviewing the funding request and is expected to come in at the same level, Draper said. A number of other banks are looking at the request, and Draper thinks there may be some credit union participation as well.

A typical conventional loan requires a 25 percent down payment.

If a business owner gets a Small Business Administration 504 loan to buy a building, the down payment drops to 10 percent. By participating in the loan pool, a business would be required to come up with 5 percent of that down payment.

Buying a $1 million building, for example, would typically require a $250,000 down payment. A 504 loan would cut that down payment to $100,000, and through the city’s loan pool program a business would need to ante up $50,000.

“It’s really aimed at businesses that make a good profit and have a good cash flow and could support the debt, but don’t have the capital to put down 20 or 10 percent on the property,” Draper said.

The loan pool program is expected to go live next year, Draper said. Applicants will be able to fill out the forms online, and the participating bank will coordinate the 504 and loan pool portions of the loan through Colorado Lending Source. The closing will be held at the participating bank.

Unlike the flexible rebate element of the city’s business incentive program, the “social sustainability guidelines” do not apply to the loan pool. The only requirements are that applicants be primary employers that purchase or build a facility in the city of Boulder primarily for their own use.

A primary employer is a business that sells most of its products or services outside the geographical region in which it operates.

Contact Caron Schwartz Ellis at 303-440-4950 or csellis@bcbr.com.

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