City of Alexandria, Virginia
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MEMORANDUM
DATE: DECEMBER 5, 2018
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MARK B. JINKS, CITY MANAGER /s/
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AEDP Entrepreneurship Program Funding Proposal.
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ISSUE: Change in scope of the funding for the microloan program initially funded in the
FY 2018 Approved Budget.
RECOMMENDATION: That City Council authorize using the $100,000 in economic development contingent appropriations initially designated by Council for microloans instead on new strategies to support capacity building investments in Alexandria's entrepreneurs and startup community.
BACKGROUND: In the FY 2018 and FY 2019 Approved Budgets, City Council, at the initiation of Councilman Chapman, provided $50,000 in each of those years to establish a microloan program for the purpose of assisting Alexandria entrepreneurs. The Alexandria Economic Development Partnership (AEDP) has reviewed the viability of a microloan program of this size and concluded that the funds were not sufficient for this purpose. A City administered microloan program would require a significant investment in new staff and/or outside expertise who would be responsible for screening applicants, making loans, managing repayments, and overseeing loan defaults. Additionally, it was recommended that a Loan Loss Reserve (LLR) be created to protect against uncollected loans. An LLR of 15% of the total loan program would align with best practices. These costs would be in addition to any money required to actually make loans and in total would be significant compared to the $100,000 available.
AEDP staff and AEDP Board Members with expertise in the entrepreneurial space met with Councilman Chapman to discuss alternative strategies to microfinancing. AEDP believes other strategies will have more impact for a longer period of time then direct investments in small startup busi...
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