City works on forgivable-loan program

In an effort to attract new business to Sisters and to retain businesses already established here, Sisters City Council has been working on the establishment of a forgivable-loan program.

The City of Bend established such a program with the original intention of stabilizing companies and retaining businesses, and thus local jobs, during difficult economic periods. As the economy has strengthened, the focus has shifted to attracting new business to Bend.

Sisters' program is being crafted to be purposely broad so it can be used for both retention and attraction of jobs in order to drive economic growth.

In general terms, a forgivable loan requires the borrower (the company) to follow certain restrictions and achieve certain milestones within a set period of time. If all the requirements are met, the loan provider (the City) will either pardon a portion of the loan or convert the entire loan into a grant, forgiving the loan.

Failure to meet the terms of a forgivable loan would result in an obligation to pay back the loan, usually with interest. When the business succeeds, the City would be paid back indirectly through the increase in tax revenue, jobs, investment, increased school enrollment, and so on.

To assist the City, a three-man advisory committee has been established to offer their expertise. Bill Kuhn, senior vice president and commercial loan manager with the Bank of the Cascades, has been involved in similar work with other Central Oregon communities.

Bill Hall, Sisters resident, was the former chairman of the Community Assets Committee and has 40 years of experience in engineering, quality assurance, and project management, as well as problem-solving and process analysis.

Sisters resident Chuck Ryan has recently retired from a long career in financial management, bringing extensive experience in all things financial.

The committee has considered the structure of the loan program, necessary requirements for businesses to qualify, possible ranges of loans, necessary employee retention periods, and time periods allowed for relocation and reaching agreed employee levels.

The committee has met several times with Council to report on their progress and to seek clarification and direction. Upon completion of their work, they will present to City staff their recommended terms of agreement for a forgivable-loan program, which will be presented to Council in a public hearing for their adoption.

When a business is approved for a forgivable loan, there would be an agreement that within a given period of time, they will be providing a certain number of jobs at a given wage. There would be a time frame within which those employees will be hired, and the positions would have to be retained for a predetermined amount of time.

There are a number of factors assessed when considering a company's eligibility for a forgivable loan, including financial stability and anticipated return on investment. If a company qualifies, they would be granted a loan that represents a certain dollar amount per anticipated eligible employee.

Work by the advisory committee is ongoing, with their final recommendations to the City expected to be available shortly.