MANCHESTER — After a string of bad loans, the city’s Revolving Loan Fund (RLF) is basically broke, Finance Director Bill Sanders told an aldermen’s committee on Monday.
Sanders told the Committee on Accounts that the RLF has a fund balance of $20,000.
“I don’t want to be negative, but the city has gone through a very rough patch with these loans. The guarantees have been of no value,” he said. “If we are able to reintroduce it any way, we would want to do it in a very selective way and be the lender of last resort.”
The assessment was prompted by a proposal for a more stringent loan application, which was drawn up by Economic Development Director Will Craig, based on the loan program operated by the quasi-public Manchester Development Corporation.
Craig, though, also said that he couldn’t foresee originating any new RLF loans in the near future. “I tell people the city isn’t currently lending based on the portfolio,” he said.
The discussion came the same evening that the committee voted to accept the latest write-off of a delinquent loan, $30,200 owed by the owners of Pattie Shack, a burger restaurant on Elm Street that shut down two years ago.
At one point last year, close to half of the nearly $1 million in loans lent under the RLF program were in various stages of delinquency. Since then, staff in the finance and legal departments have been to able to improve the payment rate, but they have also been stymied in collection efforts.
Alderman-At-Large Joe Kelly Levasseur said several of the delinquent loans have been restaurants, which have a high failure rate.
“I don’t even think we should be doing this,” he said. “I don’t see why we should be in this business altogether.”