The Economic Development & Industrial Corporation is proposing to create a $2 million Falmouth Recovery Loan Fund which, through a line of credit with a local bank, would make available $2 million to Falmouth businesses in low-interest loans.
EDIC director Michael DiGiano and corporation member Michael B. Galasso met with selectmen Monday, April 27, to ask the board to allocate the ground lease payments the town gets from Citizens Energy for the landfill solar development project.
The payments would be used to pay the estimated $139,000 in debt service per year over a 20-year period for the program.
If approved, the Falmouth Recovery Loan Fund would operate as a revolving fund. When a small business repays its loan from the fund, that money would go back into the fund and could be lent out again.
“The key thing about this, as we’ve been talking to our lending partners and to Mike Kasparian, is this is really tailored for Falmouth’s economy and Falmouth’s businesses,” EDIC director Michael DiGiano told selectmen. “It is not a one size fits all.”
The Falmouth Chamber of Commerce will market the Falmouth Recovery Loan Fund to local businesses. Mr. Kasparian said a number of businesses, both chamber members and non-members, have contacted the chamber seeking assistance. This program, he said, will help those businesses left behind by the Small Business Administration.
Mr. Galasso said the money would be provided to local businesses as a loan, not a grant. A typical loan would be between $30,000 and $50,000, with the loans underwritten by the participating bank. Mr. Galasso said the EDIC is negotiating with local banks for a line of credit.
“For oversight, we’re asking to create a Falmouth fund advisory board that will consist of members from the board of selectmen, EDIC and the chamber that will set the policies and procedures and also be responsible for reporting back to the board either monthly or quarterly, as needed,” he said.
Since a lot of small businesses did not feel they were be treated fairly by Small Business Administration, he said a lottery system will be used to determine the order in which first round applicants are reviewed.
“We’ll pull a number out of the hat and review them in that order,” Mr. Galasso said. “There will be no favoritism toward any one application, and it treats everyone fairly.”
He said the goal is to help businesses get through this year, enabling them to open up again in summer 2021.
Selectman Douglas C. Brown said he supported using the lease payments as a funding source.
“I support the idea, and I like the fact that it is taking from a source of revenue the EDIC folks created, so it is not really hurting us in the long run,” Mr. Brown said.
Selectman Douglas H. Jones asked how the EDIC would use the income generated by the repayment of these loans. Mr. Galasso said the Falmouth Recovery Loan Fund would act as a revolving fund, allowing the EDIC to maintain the program beyond the COVID-19 pandemic.
“When they pay it back, the money stays in the fund, and we re-lend it out,” Mr. Galasso said. “We know we have a crisis now, and no one saw this coming, but we don’t know what we’ll have in five, 10 or 15 years. This is something that will be available for years to come, and when we’re not in a crisis, we can do some normal lending to help grow some businesses in the town, too.”
Selectman Susan L. Moran said the benefits of this fund extend beyond the short term.
“One of the benefits [of having an EDIC] is we can use these types of opportunities to grow our business tax base within the community and to keep a vibrant downtown so we don’t end up with empty stores,” Ms. Moran said. “It really gives us a leg up, hopefully, if we can give business folks the tools where they can hang on a little bit longer.”
Town Manager Julian M. Suso said the EDIC has some experience in this matter, having previously run a loan program circa 2008. Mr. Suso asked the EDIC for a copy of the records and a summary of the loans made at that time, including a list of businesses who benefited.
Selectmen will vote on the creation of a Falmouth Recovery Loan Fund at its next meeting, which will likely be scheduled for Monday, May 4. This allows Falmouth town staff, including town counsel and the finance director, as well as members of the public to provide input on the proposal.