Micro Enterprise Loans

The purpose of the Micro-enterprise Loan Program / Business Incentive Loan Program is to facilitate economic development through the establishment, stabilization, and expansion of micro-enterprises and small businesses.

Authorization
24 CFR Part 570; City of Springfield Special Ordinance 26604

 Eligible Activities

  • Equipment
  • Furniture and fixtures
  • Infill improvements
  • Other start-up costs
  • Merchandise inventory
  • Working capital
Eligible Applicants
Micro-enterprise loans are limited to retail businesses with 5 or fewer employees at the time of the loan application.

Business Incentive Loans are available for businesses with more than 5 employees.

Meeting a National Objective
The Micro-enterprise Loan Program / Business Incentive Loan Program is funded through the federal Community Development Block Grant program. All projects funded through this program must meet one or more of the National Objectives for Micro-enterprise Assistance in accordance with 24 CFR 570, summarized as:
  • Low / Moderate Income Area Benefit - qualifies if the micro-enterprise assisted provides services to a residential area that has a sufficiently high percentage of low / moderate income persons.
  • Low / Moderate Limited Income - micro-enterprise assistance is provided to a low/moderate income person who owns or is developing a micro-enterprise.
  • Low / Moderate Income Jobs - the micro-enterprise assisted will create or retain jobs, 51% or more of which will benefit low / moderate income persons.
Program Benefits
Loans
Loans are available for eligible activities within the city limits of Springfield.

Loan Terms

  • 5% fixed interest rate with interest-only payments in years 1 and 2
  • 12 year term
  • Bank participation is recommended
  • Borrower injection is required
  • Business plan is required
  • Principal and interest payments in years 3-12
  • Recipient must attend one year of quarterly education sessions
  • Secured by appropriate collateral and personal guarantees
Approval Process
A Loan Committee comprised of senior staff personnel assigned by the Director of Planning and Development reviews and evaluates all loan applications. The committee is provided legal counsel by an Assistant City Attorney.

Applications must be submitted on the application form approved by the Loan Committee. The City Redevelopment Review Team shall review all properties and provide written comments to staff on projects requesting loan assistance for construction or rehabilitation.

Based upon the information submitted, the Loan Committee shall either approve or disapprove the application. The applicant may appeal any decision of the Loan Committee to the Land Clearance for Redevelopment Authority Board of Commissioners.

Policy
The Rules and Regulations for the Micro-enterprise Loan Program/Business Incentive Loan Program was adopted by City Council as Special Ordinance 26604 and provides extensive guidance on this program. That document is incorporated into the Rules and Regulations for the Small Business Development Loan Program included in the Resource Guide and is incorporated herein as Policy for the Micro-enterprise Loan Program/Business Incentive Loan Program.

General Policies
All projects will be reviewed for consistency with both the policies for the desired incentive as well as the general policies listed on the Overview and General Policies page.