READFIELD — A new grant-funded loan program is available for people seeking to start or expand small businesses in town.

The town secured a $150,000 federal Community Development Block Grant to set up the Readfield Enterprise Fund, which will provide packages of zero-interest loans and grants up to $10,000.

The first deadline is Friday, and the program will accept applications every month.

Town Manager Stefan Pakulski said the fund will serve as an alternative or supplement to commercial loans.

“It’s oftentimes difficult to get a loan these days from banks, especially for something that’s considered risky or a startup, where even established businesses are having difficulty getting access to capital,” Pakulski said.

Although the town government applied for the grant, the fund is being administered by a committee of six people that includes Readfield residents, business owners and financial professionals. They will provide feedback to every applicant and help connect business owners with other resources, such as the Small Business Development Centers.

Committee member Cliff Buuck, who worked on economic development projects when he was Readfield’s code enforcement officer, said the town has many home-based businesses — precisely the kind of venture that banks might consider risky but can benefit from even small amounts of capital.

“Sometimes just having a little bit of extra cash for your business will make a difference, whether you can grow this year or next year, and whether you can survive,” Buuck said.

Both startup and existing businesses are eligible for the loans. The business must have five or fewer employees, including the owner or owners. The owners do not have to live in Readfield, but their income must be no higher than 80 percent of the median household income for Kennebec County.

The income limit is $34,250 for one person. It increases with household size up to $64,550 for a household of eight.

The loans cannot be used for real estate purchases or rental housing, but several other uses are permissible, including expanding a building, buying inventory or equipment, marketing, educational expenses or hiring a consultant, Buuck said.

The committee may decide to convert up to 10 percent of a loan to a grant that does not need to be paid back. Loans more than $5,000 require a 10 percent down payment.

Gail Chase, community development manager for the Kennebec Valley Council of Governments, said she does not know of any similar programs in the area her organization serves.

The Community Enterprise Grant Program is available for any community to start their own enterprise fund, and Chase said she hopes more local governments will apply to do so.

For more information or an application, contact the Readfield Town Office at 685-4939 or Amy Lawson at the Western Kennebec Economic Development Alliance at 377-2401.

Susan McMillan — 621-5645

smcmillan@mainetoday.com