NORTHWOOD, Iowa &045; A generous incentive program may attract entrepreneurs to Northwood to start up businesses.

Starting in July, the Iowa city will offer forgivable loans of up to $25,000 for new businesses and property improvements.

“This program is very simple and very broad-based,” said Mayor Bob Perry. “We need to create an image of a progressive city.”

A qualified applicant will be financed for 50 percent of the project cost or $25,000, whichever is less. The city has already set aside $150,000 from its tax-increment financing fund for the grant. Local banks cooperate with the program by providing a 5-percent-interest loan added to the grant money.

During a public meeting Thursday, Perry said he expects the program to focus on downtown redevelopment along Central Avenue, while some residents asked if residential renovations are also eligible.

City Clerk Donna Tyrell suggested that economic impacts a project would bring to the community should be the criteria to assess the eligibility and amount of financing.

A committee, consisting of two elected officials and representatives from the Development Corporation, Chamber of Commerce and homeowners, will be formed as an administrative body.

Like many other rural cities across the Midwest, Northwood’s downtown has been facing problems with vacant buildings and declining businesses.

But the city possesses powerful developmental tools, including tax-increment financing district and property-tax abatement measures. Northwood is one of several cities in Iowa where the entire city is designated as the TIF district. The fund generates about $800,000 annually, according to Perry.

Community members hope the new incentive will lure businesses and property owners, creating a bandwagon of continuous development. The city would consider allocating more funds if the program is successful.