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Sylva committee recommends extending term of Southern Lumber loan
By Justin Goble
Southern Lumber’s owners will have more time to repay money borrowed from Sylva, but not as long as they had hoped.
The town’s revolving loan committee met last Thursday (June 8) to determine whether to extend the term made to the builder’s supply company more than seven years ago.
Committee members voted unanimously to extend the loan another three years. However, the new agreement stipulates interest on the loan will rise from its current rate of 4 percent to 5 percent during the first two years. If the money is not repaid by the beginning of the third year, the interest rate will rise to 10 percent.
Sylva town board members must now approve the loan extension before it can go into effect.
Southern Lumber borrowed $500,000 from Sylva’s Urban Action Development Grant (Revolving Loan Fund) in May 1999 to construct a new store. Under the agreement, the company had until June 1 to repay the town.
Owner Tom Stovall asked for an extension after the deadline had passed.
Stovall requested another 11 years to pay the $374,665 he owes. While members of the revolving loan committee said there would be no problem renewing the loan, they didn’t want to wait that long for it to be paid off.
“I don’t see a thing wrong with renewing the loan, but we may not want to go a full 18 years,” said committee member Rick Kirkpatrick.
Though he did not want the loan to run another 11 years, town Manager Jay Denton said the company’s payment record was good, and he thought it would be a good idea to extend the terms of the contract.
“I think he (Stovall) honestly just overlooked this,” Denton said. “They’ve been making all of their payments, and they’ve always been on time.”
Denton also said the UDAG funds are meant to promote economic development, and extending the loan would work towards that goal since it would allow people to keep their jobs and keep tax dollars coming into town coffers.
If the loan is extended, Stovall requested the interest rate stay at 4 percent. However, Kirkpatrick said if the term of the loan changes, the interest rate should change as well.
“I know he’s (Stovall) asked that everything stay the same,” Kirkpatrick said. “But when you renew a loan, everything doesn’t stay the same. There are changes due to market conditions.”
Though there was some concern about what would happen if the loan was not repaid, town attorney Eric Ridenour said Southern Lumber had plenty of collateral and the town would be able to get its money back.
Town board members are expected to vote on the recommendation during their regular meeting today (Thursday) at 10 a.m. in town hall.
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