Municipal loan funds aid with business growth, job creation

With seven years under her belt of providing a warm and inviting place to eat the kind of home‑style food that makes for happy customers, Karen Scribner, owner of Karen's Main Street Diner in downtown Calais, is ready to expand her offerings to include a pub. Scribner is one of a number of Calais business owners who have tapped into one of the city's revolving loan funds, which were started a number of decades ago to help create jobs through local business development. Lubec also has a loan fund, and Eastport has had one in the past.
Right next door to Scribner's location at 439 Main Street is a corner unit that became available when the previous occupant, a pet supply store, moved down the street. Opening sometime in April will be her pub. She hasn't fixed on the name yet, but her customers have been enthusiastic about the idea. "I've gotten a lot of feedback," Scribner says. Customers were looking for a "nice, cozy bar and a good atmosphere." So she's going to supply just the ticket. It won't be a place for the late night crowd and it won't compete with the existing bars, as it will close at 10 p.m., something she is careful to point out. She explains that different types of bars, just like restaurants, provide different customer experiences.
Karen's Diner serves breakfast and lunch and is open two days a week for dinner. She will be expanding the customer reach of the diner by opening it to special parties on those evenings that it is not open for dinner. The pub will be open seven days a week starting at 11 a.m. and will have a full liquor license, serve pub food, have weekly specials and allow customers to order from the diner's menu if they wish. "It's a shared kitchen," she adds, "so it makes sense."
Since the program began, the City of Calais has awarded many "dozens" of loans, says Assistant City Manager Jim Porter, who is the administrator of the loan program. Scribner, he explains, took advantage of the city's revolving loan fund, a micro‑loan program, which lends up to $15,000 for business start‑up and assistance. The loans are for up to five years and have an interest rate set one point above prime, currently at 4.25%. The city also has an economic development loan fund for amounts over $15,000. "No loan has been over $125,000," Porter says. Generally the loan amount is for 10 years and the interest rate is set at either two points above prime for the life of the loan or one point below prime with an annual adjustment. Both funds require the amount of the loan to be backed by collateral. The combined value of the funds is about $1 million, says Porter, with about half of that in loans.

Lubec's loan program
Lubec's loan program has a total value of about $400,000, with a little over half currently in loans. As in Calais, the program was started with Department of Housing and Urban Development funds many years ago. Town Administrator John Sutherland says that the number of loans awarded over the years now fills two filing cabinet drawers in his office. Loans are for up to $50,000, for up to eight years with an interest rate at 6%.
Unlike the program in Calais, the Lubec program is for "second‑chance" loans. Sutherland explains that an applicant must bring proof that they have been turned down by a bank. But as with the City of Calais requirements, applicants must prove that they will create jobs with the loan and must provide collateral. Sutherland says of the loan applicants, "It's been pretty diverse." Loans have gone for fishing boats, equipment, lobster licenses and small business needs.
Both Lubec and Calais have had people who have defaulted on the loans, but both Porter and Sutherland note that it has been a very small percentage.
"It's a great tool for economic development," comments Sutherland. "It can be used to help secure financing or for people who don't qualify for traditional measures." He adds that it's one of a number of tools that he's able to offer people who come to him looking for small business help.
Eastport City Manager Jon Southern hopes to have the city's loan fund start up again. The city has existing loans out that are being paid on but has not made loans recently. "The city is looking at the possibility of revitalizing it and getting the committee up and running again in the next few months," Southern says.
Porter says of his city's job and economic development tool, "It's been a very successful program." Scribner's expansion proves the point. Karen's Diner employs six, and her pub expansion will employ an additional six. "And maybe I'll get a day off," she says with a laugh. That is after she gathers friends and family to put in the finishing touches on the pub's interior and the sprucing up taking place at the diner.