Henry County fund offers financing help for small businesses

MT. PLEASANT — A visit from Southeast Iowa Regional Planning Commission Assistant Director Zach James at the Oct. 30 Henry County Board of Supervisors meeting highlighted the continued resource of a revolving loan fund for county businesses.

Despite businesses from Henry County not using the revolving loan fund often, this low-interest loan program aimed at helping small businesses bridge financing gaps remains available to those business owners in the county.

James told the board that Henry County’s share of the region’s revolving loan fund still is active and ready to help new or expanding businesses.

We haven’t had a loan here for 12 years,” he said. “We want to make the program more flexible and easier for people to use.”

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The program was established in 1994, seeded with $99,000 in federal economic development funds and $100,000 from the county. It was designed to support projects that have solid business plans but fall just short of qualifying for full bank financing.

SEIRPC does this by partnering with local banks to fill those gaps. The bank provides the bulk of a loan, while the revolving fund covers a smaller portion, typically about a quarter of the total cost. When the business repays the loan, the money goes back into the fund and becomes available for the next project.

According to James, all loans are made in partnership with a primary lender as the SEIRPC’s program is not meant to compete with local banks but to supplement them. The bank provides the main loan, while the revolving fund covers the gap that might otherwise prevent a project from moving forward.

SEIRPC typically holds a secondary lien position, and as businesses repay their loans, the money cycles back into the fund for new borrowers.

Henry County’s account currently holds around $195,000, with only one partial write-off in the fund’s 20-year history. The last loan made locally helped finance Airport Road Vineyard in 2013. Since then, most activity has come from other counties in SEIRPC’s region.

James said the agency is working on an updated administrative plan to make the program more flexible and accessible to modern small businesses.

The proposed revisions would lift the restriction that limited loans to areas outside city limits of Mt. Pleasant and allow lending anywhere in the county. They would also raise the maximum loan size, add microloans under $40,000, and extend repayment terms to as long as 10 years.

Other changes would ease older job-creation formulas that capped the amount loaned per job created.

“We want to make the program more flexible and easier for people to use,” James said. “There are businesses in our region that can get across the finish line with just that little bit of extra help. This program is meant to do exactly that.”

Supervisors expressed support for updating and publicizing the fund. Supervisor Marc Lindeen also noted that rural and small-town businesses could benefit from renewed marketing through local lenders and chambers of commerce.

James said SEIRPC plans to reconvene the loan review committee, reestablished last year, to finalize the changes before bringing them back to the board for approval. Once adopted, SEIRPC would continue managing applications, compliance, and repayment tracking for the county.

“The money’s sitting there ready to be used,” James said. “Our goal is to help get projects off the ground that might otherwise never happen.”

Comments: AnnaMarie.Kruse@southeastiowaunion.com