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Small businesses in downtown Potsdam receive help from village

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POTSDAM — Since 1995, the village has offered microenterprise and growth fund loans to help finance small businesses downtown that are getting started or growing.

Potsdam Planning and Development Director Frederick J. Hanss said that although some businesses default on their loans, 85 percent have repaid them and contribute to the success of the village.

“All of these loan funds are designed to lend money to people who are unable to get commercial credit,” he said. “We’re not in business to compete with the private sector; we’re in business to deal with people that the private sector can’t or won’t lend money to.”

Some of the funding for the loans originated with a block grant in 1995.

“We’re not using funds that come out of a taxpayer’s pocket directly,” he said. “We’re talking about money that, in most cases, was received in the 20th century and has continually been lent and re-lent out over time.”

Mr. Hanss said the loans are up to $25,000. The Planning and Development Office was giving out about 12 per year, but since the recession, it’s been about three per year, he said.

“They’re riskier loans to begin with, and sometimes they default on their loans,” Mr. Hanss said.

Mr. Hanss said that last month the village wrote off $112,976 in loans that business owners were not paying. He said that as of right now, the office has 15 accounts, of which two are delinquent.

Mr. Hanss said that even when a loan is written off, the village still can collect from that borrower.

“We have loan collection software that reminds us when a borrower has not made a payment on schedule, and that person then receives a late notice,” he said. “If it’s become a serious delinquency, they’re referred to the village attorney for collection.”

In some cases, Mr. Hanss said, the village has seized collateral when business owners stopped paying.

Mr. Hanss said the village seized kitchen equipment from the West Village Bistro that used to be on Elm Street because the owner defaulted on loans.

He said that not everyone who applies for the loans is accepted. He said the application process starts with the evaluation of the borrower’s business plan. There is also an application form with additional information to be filled out. Both then are reviewed by a village committee to determine whether the applicant will receive money.

Mr. Hanss said that over the years, people have been very careful to repay the loans because they understand that what they don’t pay back will not be available to the next business that needs funding.

“When you think about the fact that these are not people that could go to a bank and borrow money, I think that’s amazing and I think it says a lot about the character of the borrowers that we’ve had and the quality of the loans that we’ve made.”

Mr. Hanss said most of the borrowers repay their loans within five years.

“One of the reasons Potsdam is so successful is that it does have a way to help people get a start for their business, and it’s been tremendously successful over time,” he said.

Mary E. Hilton is the owner of Maple Run Emporium, 49 Market St., a specialty food store that opened in April 2011.

She said the village was very helpful with finding a location for her business as well as providing her with a loan to finance renovations.

“When writing my business plan, I spent a lot of time with Fred,” she said.

Ms. Hilton said she makes monthly payments and is halfway through paying back her loan.

“I’m very happy that there are so many agencies in the north country that are willing to help entrepreneurs,” she said. “I was very lucky and grateful that there were so many professionals helping me.”

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