NETEDC, local banks initiate new downtown loan program
Photo above: Business owner Jason Gilliland accepts the first check from the new downtown loan program. Photo by Scott Robertson
By Scott Robertson
Bank of Tennessee, First Tennessee Bank and Mountain Commerce Bank have created a new loan program to assist downtown businesses. Representatives of all three banks were on hand for the presentation of the first loan check to entrepreneurs Jason and Julie Gilliland at a ceremony in downtown Erwin Aug. 17.
“It mitigates the risk for all of the banks involved,” said Garland “Bubba” Evely, city executive for Bank of Tennessee, who was the first banker involved in the project. “That allows us to work with some smaller downtown projects than any one of us might do.”
The program also benefits the loan recipients in other ways. “This downtown loan program allowed us to save some up-front money – not spend it on closing – so we could put that toward the improvements our building needed to change it to the use we’re envisioning,” Jason Gilliland said. Gilliland and his wife Julie plan to create a restaurant on the lower level of the former antique mall at 105 Main Street, with two loft-style living areas on the upper floors.
Interior demolition began in late July, the Gillilands said, with a healthy amount of TLC needed. At the time of the loan announcement, the entire façade of the old storefront had been ripped away, as had the majority of the floor on the second level and the first level ceiling.
“Julie and I had been mulling over investment opportunities in and around the Johnson City area since last fall,” Gilliland said. “We were introduced to the folks at the Bramble, and we were very intrigued by the improvements going on in downtown Erwin, and on Main Street infrastructure. We recognized the appreciation for and commitment to its downtown that the town had and their overwhelming desire to work with developers to improve the quality of life here. So there was no question we needed to invest here in Erwin.”
The loan program lends funds to businesses in the eligible business district at 4 percent for up to 15 years depending on the life of the asset being financed. “This program got established and made its first loan all within a month,” said Ken Rea, First Tennessee Development District (FTDD) deputy director for Economic and Community Development.
Created under the auspices of the FTDD’s Northeast Tennessee Economic Development Corporation (NETEDC), the Downtown Erwin Loan Program is similar to existing programs already in place in Johnson City and Greeneville, Tenn.
The existing downtown loan programs in Johnson City and Greeneville have been put to good effect since the inception of the first program in 1991. NETEDC loan funds have been used to complete projects ranging from the purchase of a building to major renovations including roof replacement, HVAC upgrades and equipment purchases.
The owners of the old Mansy Building in downtown Johnson City received redevelopment loan funds in 2008. That building is currently occupied by Freiberg’s Restaurant on the ground floor, with Sparks Plaza’s office space on the second floor and a condo on the third. It was one of the first major renovations of a downtown building under the program.
More recently, the London Lofts building in Johnson City was the beneficiary of another downtown redevelopment loan. That loan, approved in 2014, allowed the location of a Trek bicycle store in downtown Johnson City, with build-out of 20 apartments on the floors above.
In Greeneville, the law firm of Santore and Santore received a redevelopment loan in 2015 for renovations to existing office space near the courthouse. To date, NETEDC has made 102 loans totaling $7.1 million in the creation of 688 jobs.