The economic arm of the city of East Grand Forks set loan limits Tuesday. The first beneficiary of its new standards is likely to be one of its bigger success stories -- River Cinema in the Riverwalk Centre.
The Economic Development and Housing Authority has operated with an unwritten, assumed limit of $150,000 for loans given to start-up businesses. It didn't have even an unwritten limit for second loans for those businesses if they expand, even though they have granted such loans several times.
But the board made it official Tuesday, setting maximums of $200,000 for start-up loans and $150,000 for expansions. But a single business can't receive more than $300,000 total. And the EDHA won't lend more than one-third of the mortgage, requiring banks to provide the other two-thirds.
River Cinema, a smashing success story for attracting visitors to downtown East Grand Forks, received a start-up loan of $150,000 before opening in December 2007. Now that it is adding three screens in the downtown mall, it has applied for a similar amount.
Although the limits aren't a big change from the way the board operated in the past, it makes the standards formal.
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"I favor something in writing," board member Marilyn Larson said. "I prefer fair and equal treatment to all, rather than hip-shot."
Although board members agreed not to set a time frame before a second loan can be issued, board member Justin Hecht recommended caution.
"Sometimes your eyes get bigger than your stomach," he said. "We want to make sure something is not just a fad but a sustainable business."
Reach Bakken at (701) 780-1125; (800) 477-6572, ext. 125; or send e-mail to rbakken@gfherald.com .
