In the last five years, Manchester officials have used the city’s Revolving Loan Fund (RLF) to provide loans to 21 businesses. Now 11 of the 21 are behind in payments. Those 11 owe the city $350,000, some of which it will never get back. This is what happens when the city plays investment banker.
The city lost $56,000 earlier this year when two of the businesses it funded, “Make and Take” and “Under The Veil,” went bankrupt. Others — Lazy Nick’s cafe, Maax Inc., a clothing embroidery business, and Pattie Shack — have gone out of business, but the city is still trying to collect the balances it is owed. Some that remain open, such as J.W. Hill’s restaurant and costume shop Mary’s Closet, are behind on payments.
Three years ago, then-city Economic Development Director Jay Minkarah said “The RLF is Manchester‘s own jobs program.” One of the businesses to receive an RLF loan that day was Circa 1906 deli. It is closed. Another restaurant funded later that year, Pochitos Mexican Restaurant, also is closed, as is RLF-funded Richard’s Bistro. Some jobs program.
The RLF provides small-business loans to entrepreneurs who would have a hard time getting conventional loans. That is, its whole point is to provide high-risk loans. This is hardly an area of expertise — or necessity — for city government. Despite some successes, the program’s primary function is to risk public money so politicians can claim to be stimulating the economy. It ought to be scrapped.