Palmview plans to crack down on local businesses that borrowed money through a low-interest loan program but failed to follow the rules.
The City Council hired McAllen-based law firm Walker & Twenhafel last week, asking the attorneys to handle “collection of loans” to Roberto Jackson, the former La Joya city attorney; Ismael “Smiley” Cantu and Nereyda Cantu, who own a daycare called Imagination Express Learning Center; and Palmview businessman Miguel Cortez.
Jackson, the Cantus and Cortez borrowed money from the Palmview Economic Development Corp. through a low-interest loan program funded by the U.S. Department of Agriculture.
With rock-bottom interest rates and better terms than a standard bank loan, the program is designed to kick-start small businesses. As they repay the money, the program is supposed to make new loans — starting a cycle of economic development.
Jackson borrowed $187,500, according to city records. The Cantus borrowed $200,000. And Cortez borrowed $23,000.
When the Palmview Economic Development Corp. went under, the city started managing the loan program.
Many businesses had problems paying back what they borrowed.
“Almost all of them, at one time, went about two years without making a payment,” said city Finance Director Rachel Chapa.
Palmview recently re-examined the loan requirements, Chapa said. The city sent letters to Jackson, the Cantus and Cortez during April, asking them to provide proof of insurance and other records.
They must carry standard property insurance, which covers fires and storm damage, and life insurance, which covers the business owner. Palmview also requested workers compensation records.
When they didn’t respond, the City Council hired Walker & Twenhafel.
Jackson and Ismael Cantu, though, said they didn’t recall receiving letters from the city.
Problems with the loan program were well known, Jackson said. Many businesses just stopped making loan payments and the city didn’t attempt to collect.
“It was really, really bad,” Jackson said.
Jackson borrowed $187,500 through the program in 2007 and built a law office on Palmview Commercial Drive, according to city records. By 2016, when the city approved a modified loan agreement, Jackson owed nearly $53,000.
“There’s so little left on mine that I can pay it off at any time,” Jackson said, adding that he plans to make the final payment during the next few months.
Jackson said he didn’t recall any letter from the city asking about insurance.
Ismael Cantu and his wife, Nereyda Cantu, borrowed $200,000 for a daycare called Imagination Express Learning Center.
They borrowed $200,000 for the business in 2011, according to city records. By 2016, when the city approved a modified loan agreement, they still owed nearly $195,000.
Ismael Cantu said he didn’t recall receiving a letter from the city, but the business is insured and makes regular loan payments.
“I don’t know where they’re coming from,” Cantu said.
Miguel Cortez, the businessman who borrowed $23,000 through the program, couldn’t be reached for comment.