The Kokomo Revolving Loan Board approved a nearly $7,000 loan to revive a carpentry business, but not without discussion due to the applicant’s past bankruptcies.

The board voted unanimously Thursday to approve a five-year, $6,800 loan to Kokomo resident Richard Benefiel. The loan bears interest at 75% of the current prime rate of 3.5%, or approximately 2.6%. While the council has approved Benefiel’s request, the city council of public works and safety will have final approval on the loan agreement.

The money will be used to buy wood and equipment to start a small carpentry business. Benefiel told the board that he wanted to turn what had been a hobby in his garage for the past two years into a small business.

Benefiel said he wanted to focus on small, affordable wooden products, such as benches, cornhole boards, birdhouses, wooden bee traps and more, and would sell them at the Farmer’s Market in Kokomo, area summer festivals and Old Thyme Mercantile.

“In Kokomo, I know there are carpenters here, but there aren’t that many, and the guys here are building high-end stuff, which I can’t afford,” he said. he declares.

Board approval did not come without much discussion and debate due to concerns over Benefiel’s chances of repaying the loan given his lack of experience running a business.

According to bankruptcy court records, Benefiel twice filed for bankruptcy while in Indiana, most recently in May 2021, where he and his wife cited assets of $25,728 and liabilities of $72,539.

Past bankruptcies and credit issues have put Benefiel’s credit rating in the mid-500s, according to the board.

But after about 20 minutes of discussion, the board decided to approve Benefiel’s request, but with one caveat: half of the loan, or $3,400, will be disbursed this year, the other half being disbursed within a year if Benefiel is successful -payments on time.

Risk of losing CARES funds

The city stands to lose hundreds of thousands of dollars in federal revolving loan funds if it doesn’t lend them out by this summer.

According to Julie Robbins, the city will lose its remaining approximately $280,000 of CARES Act Recovery Assistance Revolving Loan Fund if it does not lend out all the money by July.

The city has already lost 25%, or $165,000, of the $660,000 granted under the pandemic relief program because it has not loaned at least 75% of its allocated funds to companies in the sectors manufacturing, industrial, services and high technology affected by the COVID-19 pandemic by April this year.

To date, the city has only approved one CARES Act recovery assistance loan – a seven-year, $280,000 loan to AndyMark in December 2020.

Robbins said the city reached out to local businesses through flyers and word of mouth, but did not receive applications from any business except AndyMark.

“I did all kinds of mailings and met with the banks,” Robbins said. “I don’t know if everyone was just afraid to take out a loan at this point.”

Robbins added that some business owners have contacted the city with an interest in the loan program, but their businesses did not meet the program’s criteria for eligible businesses.