upper pretty $1 million of general fund prior year fund balance for the small business revolving loan fund program in the office of economic and workforce development. >> thank you very much. we have the office of economic workforce development but before we began that presentation, i would like to turn it over to supervisor kim. >> i appreciate the moment to speak. there is a special announcement that is being made currently. i want to express my support for this item. i am a co-sponsor and i am happy to see the mayor's prayer ties in ways that we can support our small businesses. i think it is really important. i will not be able to hear a report that we had asked. i am hoping that we will have this come back to budget in

terms of valuation in terms of how it is going. this could expand or potentially increase the dollar amount. most curious specifically about the number of jobs this creates and the number of low income individuals that benefit from this job creation program. i am happy to see this move forward. this has answered a lot of my questions about the fund and i want to thank the mayor's office for this. >> thank you for your comments. why don't we go to the presentation? >> thank you very much. i am the director of economic and workforce development. we appreciate the upper to 80 to be before you to answer some of the questions from the last hearing. the revolving loan fund began in 2009 when the city provided

funding of $800,000 and the program was designed to create jobs and economic dignity while providing greater access to capital. the initial funding, and many have graded and retain 75 jobs. some of the loan recipients have graduated to conventional financing and have borrowed an additional $500,000 in capital. oewd does receive a monthly report on the fund. we will be conducting with working permissions, our working partner, and an annual analysis which will include a job and tax impact, business liability, and we will endeavor to continue to collect information about the profile of the employees of the businesses that receive these jobs.

i want to clarify some questions that came up in the last hearing. the wells fargo loan is at one time source of funding. this must be repaid and only targets the five quarters that you see on the slide. there is mission street, and ocean avenue. these finds come up another question that came up is where did they come from and how long have they been with in city control? these funds were lent to the city as 80% interest by wells fargo. at that point, these were dedicated just to storefront improvements in the bayview. at the same time, the redevelopment agency had a portfolio of funds to provide grants to businesses in the bayview for restoring

storefronts. it was hard to interest businesses in a loan program when we had greagrand dollars fr the same activity. as a result, the funds state dormant for many years and it was the sheriff that we worked to have those incorporated into a revolving loan fund and for the first time we set rates for what those could be lent out and with wells fargo's help, we really expanded the scope from just store front, now they can be used for working capital, inventory, for other improvements and expanded the number of neighborhoods in which it could be used. >> just the expansion, this is to district 11 neighborhoods. this is more recent? >> yes.

>> did we see a huge amount of activity that went before the grants program in district 10 that we can talk about said that we can see that there was a lot of businesses that were applying for the grants and choosing that for a loan program? you mentioned that there is the loan program which did not succeed because we had a grant program. what is the evidence that the grant program was actually effective? >> i don't have any information today from the redevelopment agency and i did not come prepared to talk about who those grants went to and what the amount was and when they went out and i can further provide that information to you and your office but i do know that this money sat dormant. there was a up take to the store

fronts. >> thank you. >> the loan was let out from wells fargo to the city to provide these loans out at a 2% rate? >> no, the city agreed to borrow the money at 80% rate which is why the core business is now reduced to $432,000 because that is the opportunity cost of that money sitting here. last 8 years. >> we ended up borrowing that money at 80% rate. that is a good rate. >> meanwhile, we have been paying interest. >> correct. >> that is why it is a logger $500,000. >> was there a way in the future that if we do have any partnerships to not borrow unless we need it? >> absolutely.

i don't think that we would engage in any transactions with banks and we are working with a lot of banks right now and try to find ways that they can help us to provide more lending and enter into agreements that to not start until the funds are ready to be deployed. the $1 million supplemental is not approved. they will have $300,000 to launch citywide. if the supplemental is approved, we believe that we will be able to make 62 loans and would be well positioned to be self sustaining and recalled for some time because the rate of return will create a pool that can continue to resolve without starts and stops. >> iin answer to another question, and late 2009, we conducted a small business needs assessment survey and it

informed us that there was greatly reduced ability of capital from commercial lenders as a result of the recession. access to capital was an overarching need of small businesses, we actually heard it from small businesses. after the fund to launch, work is solutions handled 283 inquiries and there has been over 900 today. through the work that we do with neighborhood economic development organizations that help to package loans, we tracked through cbdt the total amount of loans that we have made. in the past few years, we have seen the number of laws that we have helped to package has been reduced from 126 to 88. the empirical evidence that we have based on the anecdotal evidence that we hear from small business and access to

capital remains a big issue. >> you mentioned that there was 900 inquiries since the program has been in place for the revolving loan fund. over what time was that? >> since april of 2009. >> and the number of loans that we have been able to package has increased? >> correct. >> is there information because i think part of the question that i had in our previous hearing was what is the real level of demand. part of it was a capacity issue. is there something that is provided or some information that we can know about the actual number of loans that working solution has been able to put out the door for their working capacity? >> i would be happy to have emily answer that question.

"the executive director of working solutions and we administer $3 million in loan funds around the bay area and last year we provided 31 loans total and then this year we are looking at hitting 50 loans depending on the additional funding, if it happens, that would be more than 50 loans. >> help me understand, the $3 million that is an annual number. >> no, that is the full pot of money that continues to recalled. we have let out a total of 2.3 million. >> 31 loans have gone out, 50 loans, expect this year. >> at least. >> does that assumed the million dollars? >> know.

>> we receive about 25 inquiries a month and we have the ability to process about four loans a month. we believe that the additional resources will allow working solutions to process between 6- 12 loans for month. these loans will be some of the lowest interest rates. we think with the increased capacity and the dollar amount we are talking about deploying, we would be able to lend out all of the bunny in the next 8 months -- of the money in the next 18 months. >> are those san francisco specific? >> yes. you also ask how this fits in with other programs and services available to small businesses. the revolving loan fund is one

of many resources that are available for small businesses throughout the city. supervisor avalos, one of the questions you ask is whether the treasure or the tax collector provides loans. they do not. they announced an initiative to do a paperless initiative. in response to this informal network of city services, the mayor recently asked the city administrator and oewd to form copper has a strategic partnerships that will benefit small businesses organized by it neighborhood. -- to form a strategic partnership that will benefit small businesses organized by neighborhood. rather than having oewd the hub of the informal network, we are better organized on a systemic basis to look at neighborhoods

comprehensively at the same time and to have to buy yen from all of the city apart is to understand both timing and deployment on how to leverage these resources. -- and to have buy in from all of this city departments to understand both timing and deployment. >> we are getting ready for the request for proposals for the cash transaction services with the city and county of san francisco. the treasurer discussed making available about $240,000 per community development financial restitution or credit union that could be available for x type of work or services. i think the money being developmen-- to live and think e money being available does not mean that they will try to access those funds. let's say there is a bridge that

could be built with these financial institutions that can't do this type of neighborhood type work but that has to be developed. -- that can do this type of neighborhood type work. there is a willingness for it to happen in the treasurer's office which is great to see. some of the things which have been talked about a lot and the great concern about how banks are not necessarily as accountable to local neighborhoods and we can create those mechanisms with our local public dollars. >> that example is the perfect one in which you have very good intentions but don't have the outreach budgets or even the connections in order to ensure that the uptake as it is robust as we would like. the idea in this interested

neighbor had shed agee involves a working group that the city administrator and die are competing to create a program designed that brings in all of the the problems that you see. >> they will to assessments and then work with the district supervisors, to create an action plan of what is needed, and then have accountability from all of these departments to deploy the resources that they currently have through oewd through the ad reject a passage that we had to. this will continue to be one of those tools but it will be one that we are very systematically marketing and offering to existing businesses and to businesses that we want to bring in to fill vacancies on all of our neighborhood commercial corridors. this brings me to our outreach and marketing strategies. it was going back to the previous slide, can you talk about how the revolving loan

fund sits within all of these disparate programs and areas of focus? i'd stand there was the investment neighborhood initiatives. -- i understand there was investment neighborhood initiatives. >> we don't>> we do not. other than other programs at oewd that we're trying to better synthesize. we are trying to create an entire spectrum of lending in a financial assistance for businesses large and small. the revolving loan fund is really the first step. we're hoping to be able to capitalize a fund through the budget process that would have flown to a higher level. that does not exist yet. but for $50,000 to $100,000 fines, working with other community lenders. we then have other federal

programs. we have a section 108 loan which provides even larger loans to businesses, through hud. we have a new market tax credit program were the city received an additional $45 million of allocation. received $35 million a year ago. another $45 million from the u.s. treasury. it is a tax credit program, not a loan program, but it winds up resulting in a dollars to projects that are in distressed neighborhoods in san francisco and/or employ low-income people. what we're trying to do in the oewd is created entire spectrum, so when we see needs, we can figure out which of our financial tools are best able to be deployed. but there are no other departments that have direct loan programs. we have grant programs in the city. summer specifically targeted to certain outcomes or activities. but direct access our capital for businesses that is flexible to allow them to do things like

expanded business, start a business, buy inventory, have working capital, does not exist as a city tool, something we can help control and direct people to. >> the sf shines program, is that the store for the program? >> that is directly for for assata improvements. currently, the funding is in a state of flux, because it was funded by redevelopment funding. so that currently has no funding. that is a conversation we hope to have with the per the budget process. thank you for reminding me that that is another tool we have in the financial bucket, the sf science program to provide facade improvements. supervisor chu: small businesses might have ada challenges. would that be a qualifying expense? >> absolutely.

the last thing, i wanted to talk about our outreach and marketing, the current outreach strategy has collaboration with over 30 targeted groups. such as commercial banks, neighborhood community associations, a merchant associations, chambers of commerce from city college, and workforce development organizations. they often include educational presentations, workshops, events, and the ethnic chamber of commerce and nonprofit organizations that serve latino and african-american business groups. outreach was conducted by working solutions. oewd is going to take a more strategic approach in marketing. the loans to underserved areas, we're going to conduct a door- to-door outreach to inform our merchants of this resource. we're going to do that in spanish and in chinese. the outreach team will be highly educated about the loan fund and will be able the answer questions on the spot, not just handing out fliers.

it is not a full intake and initial assessment as to whether this loan could work for a particular business. also, we're going to work hopefully with all of your offices. the nedo's we fund and conducting targeted outreach in neighborhoods and concentrations on small business owners. we're going to do that in the tenderloin, south of market, excelsior, richmond, and other areas. targeted outreach to those businesses, door-to-door, with a language competency to inform them of these loan programs. we will be happy to report back to you on the feedback we get. supervisor chu: thank you. i am just wondering, jennifer. the loans will expect to put out there might be at a rate of 4% to 6% for the businesses. >> correct. supervisor chu: comparatively, about a year-and-a-half ago we set of the opportunity fund, loans that would go to -- this

is separate from san francisco, but about $1 million worth of loans that they were going to make available for ada improvements across the bay area, with the san francisco in mind. you know how our rates compared to the program? >> i do not know, but i do know our rates are some of the lowest available right now. i can ask emily again. >> typically the size of the loan would be an 8% to 12% interest rates. so i fixed 4% to 6% interest rate is pretty much the lowest you'll see for this type of product. >> supervisor chu: savers and the like the opportunity fun, it would typically be between 87 and 12%? >> yes, i believe they are around 8% or 9%. >supervisor chu: comparatively, we're at 4% to 5%? >> yes. supervisor chu: the administrative fee that would go

to working solutions, want to understand and clarify. i think this was set at the last hearing. that 15% is in a one-time administrative fee. we do not continue to pay sort of an ongoing amount recalled that alone, right? >> that is correct. supervisor chu: thank you. i believe this item had a budget analyst report. are there any updates to the report? >> a couple of updates, madam chair. on page 6 of our report, we point out that regarding the 52 jobs that were created, we are advised that the number of jobs created and retained reflects only one point in time. there has not been a follow-up to determine the number of jobs that have been continued after one or more years. now, on page 7 of our report, we previously pointed out that there is available about

$784,920 available, including the wells fargo funds. if you allocate moneys for the administrative costs, there would still be left now a balance of, conservatively, $667,182, which would provide for an estimated additional 26 loans. so we consider this matter to be a policy matter for the board of supervisors, given the fact that their funds available and this request is for $100 of new general fund monies. and we further point out that the requirement to create or retain at least one full time jobs for low to moderate-income persons within 12 months of receiving a loan is not known, despite the fact that this is been a requirement. the department cannot advise us as to whether any low to moderate-income persons had been hired. supervisor chu: thank you, mr. rose. supervisor avalos. supervisor avalos: yes, oewd,

talk about retention. that would be great. >> with regard to retention, that is part of what we are pledging that we will do as part of an annual analysis. what we are required to do and what we have been doing to date in order to verify that the jobs created are low or moderate income individuals is asked the businesses to provide a forum to their employees which asked them what their income as. that form and then it needs to be returned to the employer and returned to us, and we need to be accountable to hud, as well as to you, about the claims being made about low-income jobs being created. it is a challenge to get that information which the employees are not required to provide. we have to provide best efforts to get that information. common sense says that any small

businesses that are often providing relatively low-wage jobs, that these people taking the jobs are probably low to moderate-income individuals. however, we have some of the seventh five jobs that have been created through this loan fund, we have received back 22 forms. of. 22, we have received 85% of the jobs have been low or moderate income individuals. we're going to redouble our efforts and the figure out ways to continue to get that information and we will be providing that to you on an annual basis. supervisor chu: thank you, supervisor avalos and jennifer. are there members of the public who wish to speak on item number five? >> thank you. i am sharon miller from renaissance entrepreneurship center, a small-business development center. we work with clients throughout san francisco.

we have worked with working solutions for many years. approximately 25% of the loans and working solutions' portfolios are from a renaissance clients. and their loans are in magnificent boost to the small businesses. right now, as you know, small businesses need all the help they can get, and they're not able to get loans from local banks. of the loans that renaissance does, we actually are not a loan fund. what we do is repackaged loans for our clients, and then we can work with groups like working solutions to get those loans funded. working solutions has been magnificent in both providing support for our clients and in the follow-up support that they provide as well. their rates are superb. and certainly the clients we work with our 80% at low to

moderate income. when they agreed businesses, they are creating at least one job, which is full employment for the business owner themselves. with this additional funds, i think it is really the best way to get more capital into the hands of business owners who are either starting are growing their businesses. thank you. supervisor chu: next speaker, please. >> hello. i am is small business owner and have a small company. we're based in the mission. we sell to about 400 stores throughout the country. mostly made in the usa but it is also an immigrant and have lived here for 10 years. i first reached out to renaissance and got business education through them. through their amazing helping, and managed to get to know working solutions.

they gave me a loan for $2,500 from the city's revolving fund, which really helped my business greatly. dizziness secret that -- it is no secret that the business needs money to grow. we're putting every penny we earn back into the business. it is for inventory and to hire more workers. we can grow yearly with the money. i got $2,500 from them and grew my business 210% since then. we're on the path to growth 200% again this year. getting the fuel to grow my business is essential. and there are connections on the the follow-up which is great. i managed to get two different mentors, a retired ceo's, amazing people who mentor five hours a month for free. i am really, really grateful for

the support. i encourage you to keep doing this. if you want to see this type of growth in san francisco business, you need to help fuel the growth through the small business was because i cannot get the bank funding that i needed. that is just my two sons and my small story. thank you. supervisor chu: thank you. >> what i want to bring your attention is that the mayor's office of economic development first has to get some facts right, ok? san bruno avenue, we talk about san bruno avenue where all the businesses really are, district 9. right off the bat the targeted areas are district 9, a tan, and 11. that correction is important.