By SUE RYAN
News staff writer
March 31, 2007

A Mid-Columbia Economic Development District request to refill its coffers sits on a desk waiting review in Washington, D.C., until the continuing resolution operating the federal government ends and a budget is put in place.

“The reality is we’re almost down to no funds at all,” said Steve Schafroth, the district’s loan fund manager.

MCEDD has requested a $750,000 loan from USDA. The fund is known as the Intermediary Loan Program. Schafroth said when businesses, especially new ones, can’t get regular financing through conventional means that MCEDD can loan them the money to get started.

“It gave us the ability to purchase processing equipment that otherwise we would not be able to do,” said Gail Hagee.

She and husband Scott own Pheasant Valley Winery. They have farmed in Hood River County for 26 years. While they grew pears and apples, they wanted to diversify by adding grapes and a winery operation. Hagee said conventional bank financing wasn’t an option because the interest rate wouldn’t have been something they could afford.

“The conversion allowed us to hire more people, too,” Hagee said.

Their operation is one example of a myriad of Mid-Columbia businesses helped out by the fund. Monies are available to businesses in Wasco, Sherman and Hood River counties. MCEDD loans helped Cascade Eye Clinic add a second story to their store in The Dalles. Hood River Coffee Company was able to build its facility on Tucker Road with MCEDD monies.

One reason the fund has run so low has been the boom in applications during recent months. Lee Curtis, the executive director of MCEDD, believes the interest level in starting new businesses is linked to the healthy economy in the Gorge especially with the arrival of Google in The Dalles.

“We have lent out more since July than we loaned out the last two years together,” Curtis said.

The fund began in 1999 when the U.S. Department of Agriculture loaned $1 million to MCEDD. The agency recapitalized that loan with $600,000 in 2003. While revolving loan payments always return to the account to be loaned out again, the fund needs to be at a certain level to be viable.

“What makes it work is that the USDA loan is for 30 years at 1 percent,” said Schafroth. “We administer the loans and our goal is to be thrifty enough to pay back the USDA with interest from our account.”

Curtis cautions that she does not want the public to think MCEDD can’t help them at all.

“We don’t want to give the impression we don’t have funds, we can work together as creatively as possible to find other sources of funding,” she said.

Schafroth can help business owners with information on other funding avenues.

When the federal budget is established, it doesn’t mean that MCEDD will get an automatic go-ahead on money. They still have to compete with other agencies asking for money from the same program. But Schafroth said it would give them an answer so they can get back to clients who have applied for the MCEDD loans.

“We have people who applied in August waiting to hear on their loan applications,” Schafroth said.