Question: What is the EZ loan program?
Answer: The Empowerment Zone Small Empowerment Loan Program is a loan program managed by the Knoxville Area Urban League to provide loans to new and existing businesses in the HUD designated empowerment zone of the city.

Question: Where is the empowerment zone?
Answer: The Empowerment Zone is a 16 square mile area that includes downtown and surrounding areas such as Mechanicsville, Old North Knoxville, 4th & Gill, Five Points, Morningside, Old Sevier, Vestal, and Fort Sanders (just to name a few neighborhoods). You can go the HUD empowerment zone web page and type in an address and zip code to find out if your business or home is located in the Knoxville Empowerment Zone.

Question: What can the loans be used for?
Answer: The small business loan program is for business purposes only. We look for well defined loan requests that will increase business opportunities in the Empowerment Zone. Loans can be used for equipment, working capital, operating costs – for start ups and business expansion.

Question: What are the criteria used in considering a loan request?
Answer: The applicant must have been denied a business loan request from a bank or credit union. The minimum criteria include: the applicant must be at least 21 years old, must be the business owner or co-owner and the loan must be for a business purpose. In addition, it is expected that an applicant will present appropriate collateral to support the loan, copies of personal and business bank statements, a completed loan application, business references and a business plan. Additional documents may be requested after review of your application.

Question: What happens after my loan application is complete? Who approves loans?
Answer: Loan decisions are made by the EZ Small Business Zone Loan Committee. The Committee meets on a regular basis. This committee is appointed by the Board of Directors of the Knoxville Area Urban League in consultation with officials of the city of Knoxville. Loan committee members include such people as bankers, professionals, small business people located in the EZ, and residents of the EZ.

Question: What factors are considered in approving a loan request?
Answer: The EZ small business loan committee considers applicants on seven factors: character, loan purpose, cash flow from the business, your business experience, your credit history, your collateral and a sense that the business would have a positive impact on the economic life of the EZ.

Question: Are there businesses that are not eligible to receive an EZ loan?
Answer: Yes – there are businesses that cannot be funded. Some of the businesses that are not eligible include: liquor stores, gaming facilities, pawn shops, illegal businesses, sexually oriented businesses, and so on.

Question: Will my credit score be used?
Answer: Yes, we do consider you credit score as part of the application process. However, we consider your credit history within the context of your whole application and personal financial and business history. We do not base our decision on a single credit score.

Question: What interest rates and fees are involved?
Answer: The normal interest rates on loans are Prime plus 2-6%, with a maximum loan amount of $50,000. If a loan is approved, a service fee of 2% of the loan amount will be charged. These fees can be financed along with the approved loan amount. Late payments will be assessed 10% of the past due amount. There is no penalty for pre-payment of a loan.

Question: Is my information secure?
Answer: Yes --- all members of the Kaul staff involved with the loan program and all loan committee members sign a confidentiality statement. Files are locked in a secure location.

Question: What is the role of the Knoxville Area Urban League in the EZ loan program?
Answer: The Urban League has a contract with the city of Knoxville to manage the EZ loan program. It assists loan applicants prepare the loan application, provides training and assistance to loan applicants and persons who have received loans, assists the loan committee and other related tasks. The Knoxville Area Urban League does not make final decisions on loans.

Question: What programs are available at the Urban League to assist me with personal finance and other financial matters that might assist me in my business?
Answer: The Knoxville Area Urban League offers a number of workshops and seminars throughout the year on economic empowerment including workshops on buying a house; workshops on the responsible use of credit; classes on personal finance, investing and entrepreneurship/small business management. In addition, the Kaul is a clearinghouse for small business on where to find resources to help them develop their businesses.

Question: Does the Knoxville Area Urban League offer other loan programs to small business people?
Answer: Yes. We offer a micro financing program for low to moderate income people in the greater Knoxville area who have an interest in creating and expanding business opportunities in the area; and a bridge loan program for minority contractors.

For additional information contact Mr. Felix Harris at the Knoxville Area Urban League.
Phone:  865.524.5511
E-mail:  fharris@thekaul.org

Click here for a Summary of Empowerment Zone Related Federal Tax Incentives