NEAL P. GOSWAMI
BENNINGTON -- Town officials hope to update a revolving loan program and perhaps boost the amount that can be borrowed to help start or expand a business.
Town Manager Stuart A. Hurd and Economic and Community Development Director Michael Harrington briefed the Select Board Monday on proposed changes. Harrington said he reviewed the existing municipal loan program and found that much of the language and requirements date back to the late 1990s.
Commercial banking and lending requirements have changed significantly since then, Harrington said, and he has worked to update the town program to reflect current realities.
Hurd said a proposed change would boost the amount people could borrow from $25,000 to $100,000. "The program itself has new limits," he said.
The proposed change was made after "a hard look" at the program, Hurd said. The board will be asked to adopt the changes at a future meeting.
Select Board member Christopher Oldham said he was concerned that increasing the amount available for each loan would limit the number of people that could apply. It could also put the town at risk of losing more money, he said.
However, Harrington said the town is also looking to update the application process. The town will be requiring additional information from applicants, including a full business plan and specific information on collateral that applicants are putting up against the loan.
"It certainly takes additional due diligence on our part if we're going to go to that maximum limit," Harrington said. "It's a question of whether you're spending that money on a start up business or if it's a relatively low-risk situation like a growth opportunity."
"I want us to make sure that it does require some effort on behalf of the applicant," Harrington added.
He said boosting the maximum loan amount to $100,000 makes sense because the costs of starting a business have grown over the years. "Many projects far exceed the $25,000 limit," he said.
Hurd told the Select Board that some businesses have already been loaned up to $100,000 through special waivers. The higher amount has been used for expansion opportunities, he said.
Changes to the application process were made with the assistance of Select Board Vice Chairwoman Sharyn Brush, a commercial lender for People's United Bank, according to Harrington. He said the application used in the past was "rudimentary" compared to current commercial standards.
Harrington also said he plans to continuously update the town's lending program to more closely conform to industry standards. That will require regularly reviewing and update the program, he said.
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