table no. 2 that the proposed $1 million supplemental ordinance, coupled with the additional loan funds from previous small- business loan repayments, the funds for the small-business loan fund would have a total available balance of more than $500,500, including $226,000 for working solutions and administrative work, $1 million for loan capital. currently, the average small business loan is $25,000, as reported, such that the additional loan capital of $1,283,000 would fund about 55 loans, each by the requirements of the loan are to generate at least one job for low to

moderate income workers for a total of 51 new jobs in its infant sysco. at the bottom of page 85, we pointed out that as of the riding of the report, there has not been an overall independence valuation of the program. in addition, as of the writing of this report, neither the office of economic workforce development nor the working solutions are below the moderate income jobs that have been created under the program, even though there is a requirement that each loan produces at least one job. so, on page 6 of our report we see that there has not been an independent evaluation of the program. there is currently a total of $768,000 in funds available to continue the small business program. that would be approximately 31

additional loans. we consider the approval of these general fund monies to be a policy decision for the board of supervisors. supervisor chu: thank you. supervisor avalos: just one question. office of economic and workforce development, i feel like the idea of this program, the concept is something that is important in terms of being able to restores our commercial corridors and small businesses in san francisco. i just feel that for bringing $1 million in, 51 jobs, it does not seem like it would be able to create a lot of jobs for $1 million. before we come to that realization, i was releasing not a lot of parts of this loan

coming to districts like district 11, the sun set, even though the average is done. we do not have the model that meets the requirements for the first language that is not english. we do not have the environment that would be welcome to the merchants. the folks on ocean avenue help to build those relationships. in terms of how we can create a revolving loan fund, and how it can serve businesses along a corridor. i have been to ones in other districts and have seen how they

are successful. it seems like a different type of business that can access these loans, to a greater extent. i see some really great businesses that are there. they are more on the peak and. we actually have small manufacturers. i am seeing a difference in the neighborhood about the types of businesses that are there and how they are be able to be served. we have a model that is able to actually work in various districts, but i do not think we have that, though it would be great. i am concerned that we would be moving forward on a program that is not going to lift as many votes as it should lift. i would like to get there. i think that it is a working

idea to start up with. i do not think it be quite got the formula for that. we are not going to have a valuation until a little bit later. we have also had the experience, people working for the office of economic workforce development, there is an experience that we have had. how was that informed by the next round? >> your concern is as similar as ours. the same concern about reaching out to the under-served neighborhoods. we have been working to get the word out and we plan to do so with this new influx of recapitalizing the revolving loan funds. first, we are going to see what businesses we can reach. since they are city-wide, we are very proud of that and are

cognizant of the idea of what you're seeing. these commercial corridors are not getting assistance. we will be working with working solutions in the office to work on the marketing in the outreach program. >> amy cohen here, we have a constellation of programs and services available. there are times when this loan is not the right moment. there are organizations that give people smaller loans and provide different kinds of assistance. i wanted to make two other quick points. they make many more jobs than the required, and i can think of other examples of that. the other point to make is that this money revolves. although it is one job per 25,000 when it goes out, when it comes back in, it is making

those jobs again. whenever it needs replenishing. supervisor avalos: i think that we have -- i have been thinking about a model that might be useful and how we can saturate departments from the commercial corridors. especially in particular areas that are really troubled. i do not want to be specific to district 11, as there are places with difficulties like the difficulties we have. how can we believe focus services around pedestrian safety? along with these revolving loan funds.

we do a combination of loans and grants that will show a physical difference. to me, that would be like a step in another direction. i think that it would actually make people see a difference as well, as to how such programs will be serving as. i am not sure that we have thought about it in terms of those ways, but there are intersections on [unintelligible] and [unintelligible] that could use that type of concentration of services like that. it would be a great component. but the think? -- what do you think? >> absolutely right. it is how the neighborhood market initiative has been modeled. we have not had the resources or the leadership to do what you

say. as the mayor is getting ready to launch in his neighborhood strategy, we have reviewed all of the things that you have said as part of the tools into kit. we think it is important, since it is not the be all and end all by itself. >> thank you, a supervisor -- supervisor chu: thank you, supervisor. i also want to second what was said about the average in the different neighborhoods in the district's where there was much more that needs to be done. there is a comprehensive strategy that needs to be looked at. we have often talked about it. supervisor kim: i am excited that the mayor's office is introducing this. i absolutely believe that the city should be increasing sources for micro loans for small businesses.

it is one of the right ways for us to support small businesses and job creation. i saw that there were a number that have approved loans from district 6. i do have concerns about neighborhood diversity, even though they are not in neighborhoods that i represent. in terms of whether there is a strategy for the giving out of these $1 million in loans, having a strategy in terms of the best bank and how to have the most impact with high vacancy rates, funding two to small businesses in that corridor. i know that there is capacity

for cantonese and spanish, but not other languages. how might we be able to support working solutions on that? and when is the next evaluation going to be in this evolving work program? >> thank you. i will answer those questions about language capacity. the businesses have specific needs. we would also be able to work with maybe a local nonprofit that would like to profit with us to serve those small business needs. there are other non profits that have additional language capacities to meet the need. >> through the community development block grant programs, we fund a number of

organizations and community centers. there are a number of organizations that can exist on the fund already. i think that there are two ways to look at these loans. one is as the tool in a tool kit for a commercial corridor strategy. i think that it is probably different in each neighborhood as to what the strategy would be. the other way to look at this is broader than a commercial corridor. in some cases, we will be looking to provide loans in a commercial corridor. i think that there is a real

need for those kinds of businesses, as well as retail corridor businesses. supervisor kim: i was not suggesting that as how the funds should be utilized, but it will be important to have a sense of what the focus will be put the small business revolving loan funds. it is manufacturing or the commercial corridor, it would be helpful to know how. >> if there are specific recommendations that you have for average that we can do, or strategies that we can develop, we are happy to work on that. we have a lot of data, as you can see. we can commit to doing one by the end of the calendar year. supervisor kim: so, in june, 2012? >> i was going to suggest the

calendar year. supervisor kim: that would be great. for me, personally, i'd like to see the strategy for the small business revolving loan fund. i am not suggesting a particular strategy. i would just like to hear how it is in terms of our own investing of money. i would like to know what the city strategy is. i am curious to see whether or not community engagement can help with solutions for other capacities for language that they have. >> that is a great idea. that would be great. supervisor chu: thank you. i have a few questions. i therefore holley or amy. and you speak about being at -- speak about the reason of being at this level of $1.5 billion? i know that there are a number of solutions coming into it.

part of that is the wells fargo amount. then there is the actual million dollars. from your perspective, why is it that we need to be at that level? you went through it quickly on your slides. from july through january of 2012, -- july of 2010 through january of 2012, we only let out so many loans and i would like to understand that rationale for the number 1.5. >> like i said, in 2009 it was like a pilot project. we did not have the capacity to be able to loan the $1 million that we are proposing now. over the last few years we have totally increased capacity to loans to a much higher capacity, from two employees to about four

or five, full time, where they are able to more readily process of loans requested. definitely get the money out the door >> . supervisor chu: limitations that we have are not demand issues. -- out the door >> . supervisor chu: -- out the door quick. supervisor chu: limitations that we have are not demand issues. what is the conversion rate? >> anywhere from one to four loans. many of them turn into businesses that we are looking -- working with to help them become loan ready. even if they do not get a loan that particular month, once they

complete the application, the business plan and projection will be able to be moved forward. supervisor chu: it sounds like you are approving roughly between one and four loans per month? >> yes. supervisor chu: if that is the case and the average is $25,000, why do we need $1.5 million? >> part of it is that we fully lend out the original funds and had a time when we were sitting there and waiting for the money to revolve. it takes five years for each term of the loan to revolve. there have been no additional announcements about this funding. we also provide loans throughout the bay area. we have been continually funding loans throughout the bay area. we have been funding with loans

other than city loan funds. other than the county's we're working in, we have been able to proceed if there were additional city funds at better rates, 4% to 6%, having more businesses come forward. when we initially launched the fund, 280 businesses can afford that were interested. i suspected that we would have a similar number come out. supervisor chu: this is a question for the city department. i know that we have been working with working solutions for some time. why would we continue to capitalize with one organization to capitalizere-fee it out? can you speak to that? as well as the 15% administrative costs? the way that i see it, we are charging anywhere from 4% to 6% and a very low interest rate.

over time, i've would imagine that you, amy, that we have capitalized the loans at one time and can put that money back out into multiple uses. sounds like we will be eating away at that, as they will be exceeding interest for these loans. can you speak to why be would sustain the venture and not try to get the other improvements that we are asking for? second of all, speaking to the administrative fees that are currently proposed. supervisor chu: so, back in 2009, the respondents -- >> so, back in 2009, respondents that we got that were the most successful were san francisco- based micro-lenders. the others are not san francisco-based, nor do they

have the capacity or expertise to a minister as well. as you heard from emily, they provide technical assistance and do the entire loan lending process from beginning to end with processes that are multi- lingual to provide the service. the other recipients that we got did not have that component. supervisor chu: has the universe changed, since 2009, when we went out for rflp? >> when we administered the community development block grants, we did do an rflp for lending. the universe has not changed in having a san francisco-based organization. we have others that provide loan packaging and technical assistance to businesses and

organizations like working solutions and the opportunity fund across the bay area. a follow-up -- supervisor chu: a follow-up to that question, when was that rfp done? >> we do one annually with access to capital and commercial corridor programs. we do this annually. the last one was due on january 19. supervisor chu: thank you. the remaining question was, regarding the 15% advocacy, how do we keep these sustainable over time? have we ever thought about whether there was a capacity to administer these ourselves? supervisor chu: prior to the launch, the city had a small business loan program, through the mayor's office of housing. there was currently no one in

terms of staff that could administer these loans or underwrite, which is why we had the outdoor submission program. in terms of administrative fees, the onetime administrative fee, we were able to provide administrative costs, or financing, out of corp. fund- raising of their own. supervisor chu: am i to understand that if we were allowed this to go forward, recapitalization is also -- is available? in terms of the money being repaid by future lenders going back into the planned or being spent again, there would no longer be a san francisco cost? 15% is in perpetuity? >> yes. supervisor chu: the rest is for

additional capital? >> additional capital. supervisor chu: thank you. if there are no other questions for the committee at this time, up for public comment? are there members of the public wish to speak on this item? i have one speaker card. >> good afternoon, supervisors. jim lazarus, san francisco board. we urge you to send this out for a recommendation. it targets startup companies, small businesses, hard-to- finance businesses. it has had success in its first few years. we believe this will do a lot of good, where there are starting businesses, creating jobs across the board in san francisco.

we urge your support. chair chu: thank you. next speaker, please. >> willie radcliffe, from the bayview area. high and i was used to the other and that was going, and, of course, it did not work either -- i was used to the other. especially with the proposition coming up with the banks, and it does not seem that anything is going to happen there.

we really need to get behind money out there to help businesses, and construction businesses. you can do things for bayview hunters point, but they will not have money to spend. the problem right now, we do not have enough people employed in the neighborhood to support the businesses. we have a huge problem with foreclosures going on, and they caved in to the banks to start with. the bank of america, another, union bank. it should include lending for businesses. why should we give them all of that money? we still suffer.

no one in the city can borrow money unless you are already rich. that is something the city can do if we come up with enough courage. i just feel that, you know, it should be let out. there is too much politics in it. chair chu: thank you. my name is ishmael. i was able to get a loan through the working solution. i am here to show how much this

type alone can help some businesses, like ourselves. we probably need more improvement to get more people just like me to get access to those kinds of loans. this loan would be able to help me put money into packaging some are maltese's -- some herbal tea, and with this money, i was able to put it to something. five or six people. this morning, little by little, we can bring things in in the next three to four years, and i believe bringing more money with the idea.

the city has to do its best to help us. >> -- chair chu: 80. >> my name is antoinette mobley, and i worked years ago on the third street corridor program. i have a lot of concerns, but i really feel that when you ask the question about where is the model to really sure that the small-business loan fund is really going to help assist small-business owners, i really feel that money meant to be allocated to help protect technical assistance, many of the existing businesses where the people who want to start businesses do not really have the capacity in terms of

business knowledge to really set up businesses that are going to have any type of longevity. over the last couple of years, there has been maybe six new businesses that emerged on the third street corridor. 2012, they are gone, ok? and ok, with the san francisco program that assists property owners with improving their façade so that they can make their places leasable and esthetically pleasing, there is so much bureaucracy to achieve or getting that grant. and they have to have that infrastructure said. this is very