Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Kingdom Baking Loan Extension Request
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Executive Summary
Consider extension of when payments start for the Kingdom Baking loan.
Background
Kingdom Baking completed a redevelopment project at 10130 Sunset Avenue. The site had been occupied by an abandoned, blighted gas station. The business owner demolished the building and constructed a new bakery that opened in February 2022. In November 2020, the EDA approved a loan for the project through the EDA commercial loan program. The loan amount approved was $75,000. The business owner has utilized $69,500 of the funds. The primary source of financing was a bank loan. The EDA funds were used for demolition and other exterior site improvements including parking lot, landscaping, and signage.
The loan was structured where payments would not begin until two years after the loan was approved. The intent was to allow for construction to be completed and the business to have time to be operational and profitable. Loan payments were scheduled to begin on November 1, 2022.
The business owner has requested an extension for payments to begin on November 1, 2023. He states:
We are grateful for the loan from the city. The loan was instrumental in helping us finish up the building and open our doors as of February 2022. The loan repayment was scheduled to start in November of 2022. We received the loan back in November 2020, but due to construction delays due to COVID 19 we did not open our doors until February 2022 (subs couldn’t get healthy employees and materials on time, etc.). Therefore, the 18-month cushion of being open and generating income that we were planning on before starting the repayment schedule was shortened to 10 months and as you know the first year of a new business can be very challenging financially. So we are requesting a one-year extension for the beginning of the repayment of our loan, to start in November of 2023.
Financial Impact
Funds have already been provided to the business owner. Delaying payments for a year will not likely have a major impact to the loan program. The EDA would have received $10,659 from November 2022 - November 2023.
The EDA set aside $250,000 initially for this program in 2019. To date, approximately $175,000 has been provided to three different businesses.
Staff Recommendation
Discuss the request and make a motion to either extend the payment start date or require payments to begin immediately.
Attachment List
Letter from Business Owner