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Fergus Falls council approves $25,000 loan to new pediatric therapy practice
Summary
The Fergus Falls City Council approved a $25,000 economic-development loan to Shine Therapies for Kids LLC, a start-up pediatric occupational-therapy practice founded by Cara Johnson; the loan is at 4% interest for 60 months and was recommended by the Business Development for Fergus Falls board.
The Fergus Falls City Council on Nov. 3 approved a $25,000 economic-development loan to Shine Therapies for Kids LLC and authorized the mayor and city administrator to sign the loan documents.
Clara Beck, the city’s community development director and executive director of Business Development for Fergus Falls (BDFF), told the council BDFF recommended the loan after reviewing the applicant’s plan. "She asked for a $25,000 loan from the economic development loan funds ... at 4% interest for 60 months," Beck said.
Council members questioned BDFF’s role, the provenance of the loan funds and the unsecured nature of the note. Council member Mortensen said he supported the loan but wanted clearer guidance on BDFF’s policies: "This is a young entrepreneur ... I'm gonna be supporting this tonight," he said, while asking whether the program’s goal was gap financing, low-cost lending or revenue generation for the fund.
Beck said the city’s revolving loan funds have mixed origins and uses. "Some of them are state funds. Some of them are federal funds," she said, adding that the economic development fund at issue began with a HUD CDBG grant and has since revolved through multiple loans. She told the council the economic development and façade funds currently sit "just over $1,000,000" and that BDFF’s board includes bankers who were comfortable with offering the unsecured loan with a personal guarantee.
A BDFF board member noted historically low defaults. "We've had, like, less than 1% of default," the board member said; Beck confirmed the program has a strong repayment record.
Before the vote the council asked staff to provide current policy documents and loan-balance information so members could better understand program parameters and when the city should expect BDFF to act as a gap financier versus a below-market lender. The council then approved the loan by roll-call vote.
The resolution authorizes the mayor and city administrator to sign the related loan agreements. The motion was carried at the meeting; BDFF members said they will provide the requested policy materials to council members for future guidance.
