Title
Approve and authorize the write off of $29,429.27 in delinquent principal, and to forgo collection of approximately $8,100 in interest and late fees, as of May 5, 2015, on a Small Business Revolving Loan Fund loan made to Craig Heath, doing business as Castroville Ace Hardware, as uncollectible debt.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Approve and authorize the write off of $29,429.27 in delinquent principal, and to forgo collection of approximately $8,100 in interest and late fees, as of May 5, 2015, on a Small Business Revolving Loan Fund loan made to Craig Heath, doing business as Castroville Ace Hardware, as uncollectible debt.
SUMMARY:
The County established a Small Business Revolving Loan Fund (SBRLF) to assist businesses that could not qualify for conventional financing and thereby support private sector job creation and retention. The Board is asked to authorize the Auditor-Controller to write off one SBRLF loan as uncollectible debt due to unusual circumstances that make collection unlikely.
DISCUSSION:
The County, through various Program Administrators, has operated the SBRLF since 1990. Since the County funded its first loan, the SBRLF has loaned almost $9.3 million dollars in to more than 130 small businesses and supported the creation or retention of more than 1,000 jobs. The SBRLF was established to loan money to businesses that could not obtain conventional financing. Since it was established, and notwithstanding the inherently risky nature of the SBRLF loan portfolio, Monterey County's SBRLF has maintained a loan loss portfolio of 9.4%, less than half the industry expectation.
In 1999, Craig Heath purchased Castroville Ace Hardware, receiving a $100,000 loan from the County's SBRLF and two loans, $290,000 and $30,000, from Community Bank of Central California (now Rabobank N.A.). Mr. Heath paid regularly on his SBRLF loan until July 2009 when the loan matured and a balloon payment b...
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