SOUTH PORTLAND — The City Council on Wednesday created a new program designed to strengthen local businesses.

The program makes bridge loans available to business start-ups and expansion projects.

The revolving loan fund will be capitalized with $300,000 in tax increment financing funds, which are designated for economic development projects, not property taxes.

The loan program is designed to make it easier for small businesses to obtain financing from commercial banks by providing bridge loans of $2,500 to $100,000. The loans have to be repaid within five to 10 years at a minimum interest rate of 2 percent, tied to the discount rate published in The Wall Street Journal.

Sixty percent of the fund, or $180,000, will be earmarked for new businesses, while the remaining 40 percent, or $120,000, will be made available to existing businesses.

Applications will be reviewed by a committee made up of a private citizen, the economic development director and the city finance director. The panel will make recommendations to the city manager.

All loans need will have to be approved by the City Council.

Assistant City Manager and Economic Development Director Erik Carson said the city’s involvement could help ease concerns of major lenders.

“My experience has been in the past that, when you partner with a commercial lender, it takes some of the pressure off them to allow for a loan to be made,” Carson said. “It’s that partnership that gets the job done.”

The program initially faced opposition from some councilors who were concerned the city was straying from its mission and entering the banking business.

But the program passed unanimously on July 7, largely because of provisions that would require applicants to provide performance guarantees and collateral.

Also, existing businesses have to provide up to three years of balance sheets, while start-up applicants must submit a viable business plan, among other application requirements.

“This can promote small business growth in South Portland,” said Councilor Tom Blake, who initially opposed the program. “We need to be flexible to help out big and small businesses.”

The city has already handed out two loans within the last year. A $50,000 loan, taken from federal grant funds, was given to a non-profit group establishing group housing for disabled adults in Knightville, and a $25,000 loan was given to Megquier & Jones, a local steel company that was on the verge of closing.

Councilor Linda Boudreau remained critical of the steel company loan, and pointed out that the loan program could not be used to bail out a business.

“I don’t see where this allows what we did last year,” Boudreau said. “I like that it’s for start-up businesses.”

Mayor Tom Coward, a real estate attorney, said he has seen the benefits of a similar program in Portland and is excited about the potential in South Portland.

“It could be something that with a little luck and improving economy be something that generates a little extra oomph to our local economy,” Coward said.

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net

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City delays raising oil tanker fees, increases others

SOUTH PORTLAND — Doing business in the city just got a little more expensive.

The City Council on Wednesday approved sweeping fee increases for businesses that need licensing under the city’s general business regulations, which were also modified to make it easier for the city to adjust fees annually.

Those increases, however, did not include a proposal to increase the fee the city charges to inspect oil tankers for fire safety, which was part of the 2011 budget.

Since the fee increases were proposed, Assistant City Manager Erik Carson said the city met with oil terminal managers, who were unaware of the increases when contacted by a local newspaper.

After that meeting, Carson said the city will not increase the fee from $50 to $135 until 2012, to give the terminals time to account for the cost increase in their budgets. Unlike the city budget, terminal budgets are set to the calendar year rather than the fiscal year, which starts July 1.

“A mid-year change to their budgets would create problems,” Carson said.

The council also voted to eliminate specific licensing fees in Ch. 14 of the City Ordinance. Instead, the ordinance will refer to a fee schedule, which will be set annually by the council.

The change allows the council to adjust licensing fees with one public vote, rather than two.

The council then increased many of the licensing fees from $10 to $410.

Restaurants and night clubs face the biggest increases. Some restaurants will see their license fees double, from $95 to $200. A club with a Class A liquor license will increase by $300, from $1,800 to $2,100. And a tavern with a stand-up bar and malt liquor license will see an increase of $410, from $190 to $600.

The new fee schedule also adds license fees for skateparks, car washes, farmers markets, push carts and temporary vendors.

— Randy Billings

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