PETERSBURG, VA (WWBT) - The city of Petersburg has obtained a $6.5 million loan through Wells Fargo to help meet cash needs for the next nine months.
The city plans to use the money in two phases, according to a press release. "Phase One" of the loan will focus on securing everyday operations and essential services, the city said.
In a news release Thursday morning, the Interim City Manager Tom Tyrrell says the loan, which has an interest rate of 4.5 percent, is "not an infusion of cash to pay off past obligations. We will pay our past obligations and will announce our program to accomplish those payments as 'Phase Two' of our Fiscal Stability Plan."
The loan, plus interest, must be paid off by October 2017.
It's nothing new for Petersburg to take out loans. It's been a common practice for years. But then came this year's budget crisis, which made lenders think twice. That's why Thursday's deal with Wells Fargo is a huge relief for city leaders.
"To make it clear how dire this was, if you had not gotten this loan, then what?" NBC 12 asked Tyrrell.
"We would have had trouble making payday, making payroll," Tyrrell answered.
That's why he says it was so important for Petersburg to secure a loan. It's something city leaders had been working on even before his agency - The Robert Bobb Group - got involved.
"We're a city that has a BB bond rating with a negative outlook, so hundreds of people weren't lining up at the door to loan Petersburg money," Tyrrell admitted.
Thursday, Wells Fargo stepped in to help. NBC12 is told it cannot be applied to the city's past due bills, only current operations.
"I think it's a great thing if they do right with the money. Not if they mess it up and do like they've been doing," said Geneva Hinchey, who works in town.
When it comes to their city...
"We hear a lot of people talking about it. How they think it's really sad," said Patricia Hinchey, a waitress at Dixie Restaurant in Old Towne.
Still, customers and staff are hopeful.
"We've got a lot of good businesses down here. A lot of history down here," Patricia Hinchey said.
Customer Patricia Walker volunteered with the city's Hispanic Liaison Office. But not anymore.
"Because of the money," she said.
The office had to shut down. She considers it a loss.
"It was helping a lot of Hispanic people…[with] documents, Medicare," Walker said.
Thursday's news of a multi-million dollar rescue won't bring the office back, but it will offer a short-term solution to keep the city operating as it desperately works to rebound.
"Get the city back together because it's a beautiful place," Geneva Hinchey said.
Again, the $6.5 million isn't free money, it's a loan with a 4.5 percent interest rate. It must be repaid in October of 2017.
Tyrrell says he's sure the city will be able to repay it, otherwise Wells Fargo wouldn't have agreed.
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