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Wednesday, August 22, 2007

Meet your new lender (or partner): the PDC

The Portland Development Commission's touting a new small business loan program called "near equity." They've got $550,000 of city general fund money to lend out to small businesses. According to their website:

This new loan fund is a flexible hybrid between equity and debt financing and was created to address the gap between project cost or working capital and private financing. Unlike PDC’s other loan programs, which are primarily restricted to bricks-and-mortar projects within urban renewal areas, the Near-Equity program is citywide and meant for direct business support such as working capital and equipment purchase, rather than for real estate-related transactions. Each eligible business could borrow up to $50,000.
Interesting concept. Anybody got the fine print on the "flexible hybrid... near-equity" terms? Sounds a little linchpin-ish. Who gets to say whether it turns out to be a loan or a partnership in the end? The PDC? The borrower? And isn't there some sort of constitutional provision against Oregon cities investing in equity in private corporations?

Portland certainly does need to do more to help its homegrown businesses. This could be a small piece of a larger solution to the city's anti-business reputation.

Comments (8)

Maybe Rosy Sizer can get some money for that Sexual Assualt Division since its general fund money.

Whadda ya think?


Actually, if the PDC gets repaid the $550,000 with interest, the program's only cost will be administration. Of course, I shudder to think what that amount might come to. It's government, after all...

Administrative costs for PDC are a little less than 10%, based on the current budget posted on their website.

Less than 10% of what? In this case, 10% of $550,000?

I don't trust anything PDC does.
The tram, the street car, the hotel, the Burnside Bridgehead, and on and on...
Just try and read their so called budget.

... isn't there some sort of constitutional provision against Oregon cities investing in equity in private corporations?

PDC ought to concentrate on simply getting their debt paid back, before looking into equity schemes. Lord knows, their track record isn't good.

I think Greenlight Greater Portland (formerly Four County Economic Development Corporation ) has something to do with this. This is a trial balloon and PR test.

If the Economic Development clowns (Master Networkers) want a real test then it had better match the real world examples found in many little pockets around the globe. Not a one could be properly analyzed without reference to their currency. And yet we still do not have our own currency (Sten Credits) and a reserve. At least try to be as bright as any two bit third world economist with at least a hint of local loyalty.

Tommy's PDC vision of transition to Economic Development something means that one must add a bunch of zeros to this frog in cold water, then remix as Witches Brew.

Believe it or not, this isn't the biggest stinker they've got in the pipe.

The bigger stinker proposes that the city issue home loans to sub-prime borrowers that can't get loans elsewhere. I am not making this up.

This stinker is being sold with the bright-eyed promise that "there will be demand for these on the secondary market!" You bet your amortization calculator there will be. What sub-prime lender wouldn't want a municipality to print their applications on city letterhead and take the tearful phone calls when the repo notices arrive. Not to mention that the city will always have to cover any losses or risk a blot on its credit rating.

I wish they'd take those dollars and grant them to Habitat for Humanity, rather than get the city ensnared in the sub-prime lending cesspool.

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