Although the Delaware County Board of Supervisors voted Wednesday to terminate the county’s revolving loan funds established using funds from the Community Development Block Grant program, but loans will continue, officials said.
According to Delaware County Economic Development Director Glenn Nealis, in accordance with current administration guidelines from the state Office of Community Renewal, which administers the CDBG program, the county used CDBG funds to establish a circular — “revolving” — loan program, in which small businesses are granted loans for the purposes of start-up and expansion in the interest of promoting economic development across the county.
Loans are paid back into the revolving fund, plus principle and interest, and redistributed by the county to the next small business approved for a loan.
“Revolving loan funds are only as good your ability to take repayments from one loan and give it to another business,” Nealis said.
Since 2002, Delaware County has administered loans from the revolving fund to 72 past or current business projects, typically on a five-year repayment term, according to Nealis.
“We’ve used it consistently and considerably,” Nealis said.
Nealis said Delaware County was assessed to be in the “vast minority” of municipalities administering CDBG funds responsibly, according to an audit of the program by the U.S. Department of Housing and Urban Development conducted last year. HUD oversees the disbursal of federal funds that constitute the CDBG program and establishes federal guidelines for their use, typically to benefit moderate to low-income individuals or businesses.
Under the new policy, which will take effect April 1, New York state municipalities, including Delaware County, will no longer be permitted to use CDBG funds for the purpose of a revolving loan. Instead, the county must find another use for the program income generated through loan repayment that also satisfies federal guidelines, or else return the program income to the state.
According to Michael Triolo, Stamford Town Supervisor, it is possible to convert some of the program income into grant funds.
“Nobody is going to lose their loan,” Triolo said.
CDBG funds account for only 20 percent of Delaware County’s loan portfolio, according to Nealis.
The county will continue to operate revolving loans sourced from other funds, he said, and will “come to a satisfactory agreement to close out existing accounts for businesses currently using loan funds.”
Sarah Eames, staff writer, can be reached at email@example.com or 607-441-7213. Follow her @DS_SarahE on Twitter.