Bank offers loans to nonprofits hurt by state budget stalemateAugust 7, 2007
By Jondi Gumz - Santa Cruz Sentinel
Santa Cruz County Bank announced a loan program Monday to help nonprofits with a funding shortfall because of the state budget stalemate.
"When state funds cease to flow ... this has a crippling effect on local economies and more importantly, those that are directly served by these agencies," CEO David Heald said in announcing the availability of loans to day-care centers, human services organizations and other nonprofits.
Heald said the interest rate for nonprofits will be 7 percent, which is below prime. The fee to borrow $500,000 will be $250, with a smaller fee to borrow lesser amounts.
The borrowing limit will depend on the size of the operation. State legislators missed their June 30 deadline to enact a spending plan. Budget talks are not expected to resume until Aug. 20.
Nonprofits said it can take two to three weeks from the day the budget is signed for funds to reach them.
"I'm surprised the governor didn't call a special session," said Elaine Henning, executive director of Santa Cruz County Parents Association, who notified 850 parents and day-care providers over the weekend that checks to pay their day-care bills are on hold due to the stalemate. Advertisement Henning said in 25 years at the agency she has seen only one other budget stalemate reach the end of August.
For Heald, the budget stalemate is a deja vu experience. He was at Coast Commercial Bank in 2002 when the budget was in limbo until Aug. 31. He put together a loan program for nonprofits depending on state funds to provide services. Mary Lou Goeke, executive director of the United Way of Santa Cruz County, applauded the initiative.
"This is such an important community service to help bridge the funding gap," she said. For information about the nonprofit loan program, call Chris Maffia, 457-5003, ext. 2123.