MEDICINE PARK — The Medicine Park Economic Development Authority has a new policy to guide the trustees when they consider requests for funding from the town’s microloan program.
The authority voted 5-0 Thursday to adopt the policy, which is designed to protect the town’s interests and ensure the survival of the microloan program.
“I still think there’s a reason to put some guardrails around this program,” said Chairman Matt Latham. “I don’t think we have any pending applications right now, but I also don’t want to just kick the can down the road forever.”
The vote came after several months of discussing the proposal, including a provision that limited the maximum amount for each loan.
Loan limits Medicine Park’s microloan program offers assistance to small or emerging businesses that cannot easily obtain traditional financing. The goal is to support businesses that bring visitors to town, create jobs and provide essential services.
Businesses that are either based in Medicine Park or serve that area are eligible for loans. Home-based businesses may seek a loan if they satisfy applicable zoning, licensing and regulatory requirements.
Borrowers may use their loan as working capital to cover rent, inventory or utilities. They may also use the money to buy equipment, upgrade their business or pay for professional services.
Loans may not be used to cover the borrower’s personal expenses, pay back taxes or consolidate debt.
Under the policy, the maximum amount for any single loan is capped at 20% of the balance of the microloan account on the day when the application is ready for the authority to consider, rounded to the nearest $100. That amount will be adjusted as the account balance increases or decreases.
That provision, which was one of the sticking points in earlier discussions of the policy, spurred additional conversation on Thursday.
Mayor Rich Amadon said he had no problem with most of the policy, but he though the authority should have more flexibility in setting loan amounts.
“If somebody comes in with a really good idea and a really good thing and they have something to back it up with, and we know we can get the money back, maybe we go a little higher,” he said. “Or if somebody’s maybe kind of sketchy, take it a little lower.”
Latham said he came up with the proposed limit because he was trying to think of a number that would not cause serious problems if the town lost money. He said the 20% cap would preserve the authority’s ability to approve several loans at the same time, but he would be comfortable with raising the limit to 25%.
“I don’t think there’s a magic number, if we’re honest with ourselves,” Latham said.
Trustee Noel Alsbrook said he wanted to limit the maximum amount of each loan because the cap would make it easier to help multiple businesses.
“I’m comfortable with 20% knowing that at any point, we can always modify it,” he said. “For me, it’s just about making sure we have money in the account to loan to others when it’s needed.”
The interest rate for each loan will be tied to the Wall Street Journal’s Prime Rate on the day the authority approves the loan, according to the policy. The authority’s rate will be 1% below the Journal rate, subject to the limits outlined in the policy.
‘A phenomenal resource’ The policy requires startup borrowers to consult an advisor from the Oklahoma Small Business Development Center, who will help them write a business plan and provide other assistance, Latham said. He said that requirement, which would not cost the authority anything, could encourage businesses to apply for a loan.
“It is a phenomenal resource, and it doesn’t mean they have to use what they get,” Latham said. “But I think they should at least have an advisor if we’re giving them a loan.”
Eric Swanson is an award-winning journalist with more than 20 years’ experience covering local government and criminal justice in Oklahoma, North Dakota and Kansas. He can be reached at eric.swanson@ swoknews.com.