EDA OKs loans for Kraut's, Chateau de Chic
Tuesday, March 19, 2013 5:17 AM
Two Spring Valley business owners sat before the Spring Valley Economic Development Authority (EDA) last Wednesday morning, seeking assistance with improvements to their businesses.
First, Kenny Kraut of Kraut's Locker requested that the EDA lend him $25,000 from the EDA's revolving loan fund to update his building's façade and parking, as he noted jokingly, "the new hardware store going up to the north is making me look bad." Kraut's building was constructed in 1962, and he hopes to give it newer curb appeal with wainscoting, an awning, a steel roof and a new sign.
"If we get $25,000, we'll put another $10,000 into it for the parking lot, and if we have to put gravel out there, we will" he told the EDA. "The hardware store really looks nice, and my building has been there since 1962. It's time for an update. I'd like to start as soon as the weather clears, maybe in April."
The loan of $25,000 from the city will be repaid over the course of the next 84 months, as the EDA granted his request, citing business retention as a reason. Kraut told the EDA he would be participating in succession planning when a county program opens up again in the fall.
Next, Jenn Slifka of Chateau de Chic Salon in downtown Spring Valley was included on the agenda, as economic development director Cathy Enerson suggested that in allowing Slifka another loan to provide funding for business improvements - namely the expansion of the business to include clothing and other inventory - the loans be consolidated in order to help Slifka manage her payments and to "retain jobs and put her in a better business position."
Slifka pointed out that she began her business on her own in a smaller location and has relocated and added six employees since that time.
Enerson observed that Slifka's relocation to downtown Spring Valley has energized the downtown business district. Her original revolving loan fund amount was $16,000 for five years at 4 percent interest, which is current on payments. The remaining balance of $5,416 remaining will be consolidated into a new loan of $19,500 for five years at 2 percent interest.
Slifka said that she has come to the point as a business owner where she is working to balance handling her management responsibilities and maintaining contact with her own clients, but that she is confident that her expanded business will do well, as she has worked to offer items in her shops that people have requested, though she still "gets men in who wish that we would have more options for them." That is one reason why she wants to add inventory, namely the well-known Affliction clothing line from a company that allows small quantity purchasing that is ideal for shops located in small towns.
The EDA approved the refinance of Slifka's loans pending receipt of banking information that will verify and correlate her business's financial status. The bank has already told Enerson that there wouldn't be a problem, but the documentation has not been done yet.
Enerson spoke next about the visitors guides and that the chamber of commerce had approved paying for half of it. The proofs have been done.
She also said that she visited with a local man who's concerned about "buy local" and how that's going.
"I was thinking we might do well to show how the same $100 is recirculated in the community, like if it's spent at the motel and eventually ends up at the grocery store or the Tribune," she said, something she presented to the Chamber of Commerce last month.
She went on to cite that paperwork for The Pizza Place, formerly Homestyle Pizza, is "set...our side is all set. The only holdup is that they're waiting to close at the bank."
EDA members briefly discussed increasing the 1 percent fees in EDA-granted loans to cover legal fees related to issuing the loans. Legal fees were a substantial sum in the 2013 budget as the EDA has had to confer with an attorney over two businesses that closed without fulfilling their commitments to the EDA. Enerson said, "You can't expect the businesses who are trying to improve to make up for those who fell through the cracks."
EDA member Steve Himle said, "Part of doing business is having loans go bad, and legal expenses are going up." He asked Enerson to compare the actual costs to the fee being charged now.
Enerson concluded, "1 percent is pretty common. I will get information on it."
The next meeting of Spring Valley's EDA is slated for April 10.