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Solano EDC proposes narrower, sustainable terms for ARPA-funded small-business revolving loan fund
Summary
Solano EDC told the Board of Supervisors it has loaned $3.6 million of a $4 million ARPA allocation to 55 small businesses, has $745,329 repaid and 17 businesses waiting; it recommended lowering the maximum loan to $75,000, raising interest from 6% to 7% and keeping a 630 credit-score minimum to preserve the program’s sustainability.
Solano County’s economic development partner recommended a series of successor terms for the county’s American Rescue Plan Act-funded small-business revolving loan fund that would shrink maximum loan size, modestly raise rates and preserve the program as a long-term lending tool.
Sean Quinn and Chris Rico of the Solano Economic Development Corporation told the Board of Supervisors the program originally received $4 million, of which $3.6 million was loaned in 55 transactions. The EDC reported an average loan size of about $65,000 and said $745,329 in principal and interest has been repaid and is available to re‑loan. EDC staff said 17 businesses are on a waiting list.
To stretch the replenished balance and limit portfolio concentration risk, the EDC recommended reducing the maximum loan from $125,000 to $75,000, increasing the program interest rate from 6% to 7% and raising the lender servicing fee from $55 to $65 (the servicing fee is paid from administrative funds, not by borrowers). The EDC also proposed continuing the program’s requirement that eligible borrowers be located in Solano County and remain in business for at least two years, and keeping a minimum credit score of 630.
Megan Richards, county principal management analyst, said administrative costs have been lean and that the county will cap administrative charges at 10% of the fund, report quarterly, and return a successor memorandum of understanding to the board for formal approval. The presenters said they moved $141,000 of administrative money back into lending and closed a new loan this week.
Board members asked whether the EDC monitors recipients’ ongoing performance; staff said lenders and the Small Business Development Center provide follow-up and that recipients are incentivized to take additional technical-assistance sessions because the program rebates the $250 application fee after a second assessment. The City of Vallejo contributed a separate $319,000 ARPA allocation for loans restricted to Vallejo businesses; the presenters said that money is managed separately and is not commingled with the county pool.
The board did not vote on specific changes at the hearing; staff was instructed to draft the successor MOU and return to the board with the formal agreement and quarterly reporting structure.
