Mineral Wells EDC cleared to apply for $1 million USDA relending program to make low-interest small-business loans

The Mineral Wells City Council voted 7-0 on July 1 to approve the Mineral Wells Economic Development Corporation's application to participate in the U.S. Department of Agriculture's Intermediary Relending Program, a relending model under which the EDC would borrow funds and then lend to local small businesses.

EDC representatives told the council they would seek a $1,000,000 loan at 1% interest amortized over 30 years; one speaker calculated total interest over the 30-year term as about $157,000. EDC staff and consultant David Miller described the program as a lender-of-last-resort tool that fills financing gaps for businesses that cannot obtain suitable commercial financing, and said the EDC would set individual borrower rates on a case-by-case basis based on risk and need.

Staff described common program features and safeguards: loans are typically collateralized (e.g., a UCC lien on equipment or inventory), and most loans would carry a personal guarantee; the EDC board would review financials and approve loans and the city council would have final approval for loans over $10,000. The EDC presenter noted the program can allow interest-only payments for the first three years and that the USDA requires timely use of awarded funds in the region; staff said there is a requirement to fund at least one loan (up to a figure discussed as $250,000) within six months of funding or return the money, per their description.

Discussion touched on allowable loan sizes and limits: staff said USDA rules limit the share the EDC can fund for a single project (staff noted examples of both $400,000 and $500,000 cited in the discussion as illustrative and said most loans would be smaller). Staff also described prior local experience in another community where a smaller starting pool was grown through relending and repayment activity.

Council members asked about fair-lending and nondiscrimination obligations; staff said USDA requirements include nondiscrimination rules and that applicants would need to document prior denials from commercial lenders before seeking relending funds. The EDC said it already has a project on the council agenda that could use the program and that the EDC board previously approved the application and will review loan requests before council consideration.

A councilmember moved to approve the Mineral Wells EDC's application to the USDA Intermediary Relending Program; the motion was seconded and passed 7-0.