San Francisco weighs whether to make unprecedented $150K loan to nonprofit 

Whether a struggling nonprofit already saddled with debt should receive a $150,000 no-interest loan from The City with no guarantee of its repayment will be decided Wednesday by the Board of Supervisors Budget and Finance Committee.

The unusual proposal, introduced by Supervisor Ross Mirkarimi, would have The City shell out the money from general reserve fund, an account for unforeseen expenses, which is now at a $14 million level. Generally it’s supposed to be around $25 million.

The nonprofit Lyon-Martin is in need of the money to keep operating. It provides health services to the LGBT community.

The operation, however, has $1.1 million of debt as a result of “insufficient cash flow, insufficient payor mix, expanded services without adequate financial systems to monitor growth and ensure solvency, inadequate billing infrastructure and insufficient billing to MediCal for services provided and reduced fundraising activities,” says Budget Analyst Harvey Rose in his report to the supervisors. The debt includes $300,000 owed to the IRS.

Rose questions whether the nonprofit will be able to repay the loan.

Last year, the nonprofit served 2,500 patients, who visited the clinic 10,800 times. Eighty-four of the patients are 200 percent below the federal poverty level. About 400 are homeless or borderline homeless.

Even with the loan, the nonprofit would still need to come up with $300,000 by December 2012.

The budget committee meets Wednesday at 1 p.m. at City Hall in Room 250.

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