Although the city lost its economic development bureau manager due to budget restraints, Harrison has taken on the duties of that position and continues the facilitation of financial assistance to local businesses. “I was formerly the economic development bureau manager for the city for a period of about three years, so I have a great amount of experience and expertise in this area,” he said.

Many Long Beach-based businesses are part of associations or groups within their business corridor or neighborhood. Through those avenues, as well as utilizing technology, the city intends to begin a grassroots outreach campaign to the business community “to ensure that they are aware of the economic development resources that are available to them,” Harrison said. “From large manufacturing companies looking to expand, to small neighborhood-serving corner markets looking to update its inventory, we have economic development resources or tools that can help them to improve their bottom line.”

Gabe Gordon, owner of Beachwood BBQ, recently took out a 10-year loan through the city’s business loan program to pay for furniture, fixtures and equipment, and establish his new restaurant location in Downtown Long Beach.

Gordon said he was happy to take a loan through the city’s program rather than through a bank or the U.S. Small Business Administration, since the city offered a loan at a reasonable interest rate. “I think the city is doing a really great thing by having [these loans],” Gordon said. “It’s a great service and I really think it will help the city grow good homegrown businesses.”

Nelson’s Cabinets, a small business based in Long Beach, first learned that the city offered financial assistance more than 20 years ago, according to the company’s vice president, Steve Hoff. He said the city sent individuals door-to-door to inform businesses of the economic development opportunities it offered back then.

The company was looking into getting further financial assistance for expansion last year, and went back to the city to seek another loan. “We went back to the City of Long Beach to see if that earlier program was still around,” Hoff said. “That program wasn’t, but the person we spoke to at the city was very helpful in listening to what we needed to try and find the right match.”

This time, he said, Nelson’s Cabinets utilized a loan through the Grow Long Beach Program. The company took out a 10-year loan and has since used the funds to help pay down equipment costs and are currently exploring the idea of hiring a field sales person.

According to Jacqueline Medina, communications director for Long Beach Development Services (LBDS), the city is actively marketing its financial assistance programs through neighborhood and business associations, as well as established business improvement districts, the Long Beach Area Chamber of Commerce, the Long Beach Small Business Development Center, the mayor and city council, and others. “In addition, information on these programs will be promoted through various communication vehicles such as the web site, social media, community outreach and special events, newsletters, and other marketing opportunities,” she said.

Business Loan Program
(Commercial and Industrial Revolving Loan Fund Program)

The city’s revolving business loan program provides assistance to businesses unable to secure commercial financing, according to Harrison. The program started in 1987 and is managed by LBDS. The program was initially funded from a Community Development Block Grant (CDBG), which is a program of the U.S. Department of Housing and Urban Development. As a revolving fund, repayments of loans are used to create new loan opportunities within the program.

“The program is designed to provide capital to viable small- and medium-sized businesses, whose relocation or expansion would generate new jobs or tax benefits to the City of Long Beach,” Harrison said. “The program provides from $20,000 to several hundred thousand dollars at mixed interest rates. Funds may be used for furniture, fixture equipment or working capital. These programs are not designed to compete with local banks.”

The borrower must have good credit, adequate collateral and demonstrate repayment ability, according to city documents. Terms of the loan include meeting standard CDBG guidelines, which for this particular program includes creating one job per every $35,000 lent.

Over the past 15 years, 337 businesses have received loans through the program, totaling about $30 million. Of those, 263 loans were made for less than $100,000. All loans made above $100,000 must be approved by the Long Beach City Council. According to Moon Joo Won, administrative analyst for LBDS, there are currently 43 outstanding loans over the 15-year time frame, equating to about $1.45 million.

Grow Long Beach Fund

The city has an economic development partnership with the National Development Council’s Grow America Fund and the Long Beach Redevelopment Agency (RDA) to help fund businesses looking to grow. This partnership formed the Grow Long Beach Fund, which as been operating since 1998. It is also a revolving fund, initially funded through CDBG with $1.5 million that the program leveraged to more than $7 million through its revolving nature.

“Over the years, the City of Long Beach, including the Grow Long Beach program, has been very successful in attracting new businesses, retaining existing businesses and assisting existing businesses to expand,” Harrison said. “In the past 15 years, the city has provided loans totaling $30 million, creating and retaining close to 1,000 jobs.”

Loans range from $100,000 to $2 million as permitted by the SBA. Terms vary from five to 25 years, and rates are set at prime plus 1 to 1.5 percent. The current rates are 4.25 to 4.75 percent, according to city documents. Loans may be used for new construction, tenant improvements, working capital and purchasing new equipment, land or buildings.

The Grow America Fund does all underwriting for loans through this program. The city and redevelopment agency work with Andria Martinez, a loan officer with the Grow America Fund, and others to provide these loans to Long Beach-based businesses. The National Development Council funds 75 to 90 percent of the loan, using the SBA guarantee. The rest of the loan is funded through redevelopment agency tax increment funds.

“By having an outside consultant like National Development Council, [the city] is able to minimize their exposure and risk, and then leverage the dollars they have,” Martinez said. Because the council leverages the loan almost four to one, she continued, the structure supports minimal impact on the city.

In addition to meeting CDBG guidelines, the program also follows SBA 7(a) loan creditworthiness standards. The program currently has between seven and 10 loans outstanding, which amounts to $3.4 million, Martinez said. Since its inception, the program has seen only one default. According to Martinez, an automotive part manufacturer experienced rapid growth and was unable to keep the business afloat. She said the company was shut down in 2004 and defaulted in 2005.

New Markets Tax Credit

The partnership with the National Development Council also allows the city to provide project loans through the new markets tax credit program. “The program itself was a federal tax subsidy program that was established by Congress specifically to stimulate economic development in low-income communities,” according to Jina Yoon, regional director with the National Development Council. According to Yoon, this program was established in 2000 and allows available federal tax credits to be sold to private investors.

Those investor funds are then used to fund loans with “interest rates significantly below market rates, origination fees lower than standard, longer period of interest only, higher loan-to-value ratio, nontraditional forms of collateral, flexible borrower credit standards, and lower debt service coverage ratio,” according to city documents.

The federal government allocates $16 billion in tax credits annually, which are available to sell within certain established opportunity windows. The funds generated from selling the tax credits are then combined with city funds allocated for lending to produce project loans for low-income communities. These communities are identified using U.S. Census data, including poverty and median income rates.

LBDS oversees this federal loan program, which has yet to be utilized in Long Beach. According to Yoon, potential uses may include: affordable housing projects; historic rehabilitation or adaptive reuse; healthcare facilities; mixed-use student housing; and others. In Long Beach, the proposed North Long Beach Library project and the proposed ArtExchange artist facility project in downtown are potential candidates for this program, she said. So far the city is still exploring allocations, Yoon said.

Start-up Business And Façade Improvement Programs

The city has three programs available to small- and medium-sized businesses just starting out and/or looking to improve the exterior of the business. These programs include the commercial façade improvement program, commercial improvement rebate program and the neighborhood investment program.

“Over the past 15 years, the City of Long Beach has provided business start-up grants and façade improvements to over 2,000 businesses, totaling close to $11 million,” according to Harrison. “These loans and grants are funded through a variety of funding sources, including RDA, CDBG, EDA [Economic Development Administration] and the SBA. These loans do not have access to the city’s General Fund. Each funding source has a specific targeted business audience and slightly different criteria for eligibility, including some eligibility geographically defined. But they all work with in the construct of a family of economic development tools and resources.”

The RDA established the commercial façade improvement program to help revitalize commercial building façades in redevelopment project areas. The agency helps pay for such improvements through matching grants of up to $180,000, given to approved commercial property owners or tenants of a single building to shopping centers. According to city documents, participants must invest “a minimum in matching funds of 15 percent of project costs.” The RDA is also allowed, through the program, to provide a limited amount of design and construction services, if necessary.

The commercial improvement rebate program is managed by the city’s neighborhood services bureau, which is able to provide up to $2,000 per business for improvements to the exterior of business properties. Rebates are funded through CDBG, and commercial property owners and business owners located within designated CDBG areas are eligible. Qualified improvements are visible from the street and may include, according to the city, projects such as: painting, stucco, new signage, replacing and/or rehabilitating windows or doors, and security lights.

Another CDBG program, the neighborhood investment program, may provide up to $2,000 as reimbursement for qualified costs incurred during the first 12 months of establishing a new business. Businesses that are eligible must have a storefront on the ground floor. The idea behind this program is to encourage and increase the number of new businesses in CDBG target areas – certain commercial corridors.

According to Won, these funds may be used to cover the cost of “a business license, utilities . . . really any bill that was incurred during the opening of the business.”

Advantage CDC Partnership

Advantage CDC, a private nonprofit community development corporation (CDC) licensed by the SBA, provides SBA 504 and SBA 7(a) loans for small- and medium-sized businesses. According to Regina Grant Peterson, executive director of Advantage CDC, the nonprofit was founded in January 1979 and “was initially housed under the umbrella of community and economic development.” In the early 1990s, the nonprofit spun off from the city.

“We’ve always considered ourselves a partner with the city, but the CDC had to grow and meet SBA requirements,” Peterson said. “SBA had all CDCs expand outside of the initial target area, which was a city. We went from serving one city to two, to a partial county, to a full county, and in November 2003, SBA licensed all CDCs nationally to be statewide CDCs.” Today, Advantage CDC uses lender partnerships with commercial banks to provide loans for working capital, short-lived machinery and equipment, inventory, real estate financing and more. Though most referrals come from the lending banks, Peterson said the nonprofit does get referrals from the city and continues to serve Long Beach businesses.

Requirements for the loans follow SBA guidelines, which include creating one job for every $65,000 lent and one manufacturing job for every $100,000 lent. The nonprofit has not received funding from the city for loans since 1990. Advantage CDC has provided more than $100 million in loans to 115 Long Beach business owners since it was established. Over the past five years, the nonprofit has put together loans for 18 local businesses. Some businesses that have used Advantage CDC include Best Western Downtown Long Beach, Consumer Legal Services, Circle Moving and Storage, Felahy Law Group and others.

The newest loan program Advantage CDC is offering, called the 504 Real Estate Debt Refinance loan, is designed to help business owners become owner occupants in their properties rather than continuing to rent. These debt refinance loans are available until September 27, 2012.

For more information on the city’s business loan program, commercial improvement grants and rebates, contact Long Beach Economic Development Officer Carl Morgan at carl.morgan@longbeach.gov.

For more information on Grow Long Beach loans, contact Martinez at amartinez@nationaldevelopmentcouncil.org.

For more information on the new markets tax credit program, visit www.nationaldevelopmentcouncil.org.

For more information about loans through Advantage CDC, visit www.advantagecdc.org.