City Hall may seem like an unlikely destinations for innovative dreamers looking for seed funding, but that's exactly what Palo Alto officials are trying to encourage with a grant program that officials are planning to expand in the coming months.

Launched last year with $150,000 in federal funding, the city's new Microenterprise Assistance Program aims to bring a little Sand Hill Road flavor to Hamilton Avenue. The program, which the council approved on a pilot basis in May 2013 and made its first allocations in May of this year, offers training and money to low-income residents looking to start a business. In its first round of allocations, the city released six grants ranging from $1,000 (to Walter Barnes for a business that provides baseball and software umpires) to $15,000 (to hairstylist Heekyoung Kim).

The next round promises to be more bountiful. At a presentation last month, staff from the Department of Planning and Community Environment said it's too soon to gauge the success of the businesses participating in the program. Even so, the grant program itself is set to grow significantly as staff expands outreach and allows existing businesses that hire low-income workers to apply for grants. Under the proposal that the City Council's Finance Committee reviewed Aug. 19, the program will issue $170,000 in direct grants this year, up from $38,000 that was handed out in May.

Funding, however, is just one aspect of the new program. Grant recipients also receive training and technical assistance from city staff and mentors in the private sector. This includes help in figuring out a business model, creating a business plan and filling out a loan application. Staff's approach to the new program "is rooted in Palo Alto's spirit of innovation and the power of an idea," according to a recent report from the planning department.

"It's wonderful in a city known for entrepreneurship and innovation to actually have a program that demonstrates that those qualities are not limited by income level," Planning Director Hillary Gitelman said during the committee meeting.

Each fund recipient will be required to submit quarterly progress reports. But even though the city has yet to receive the results from the first round, Gitelman stressed that the program already has achieved some of its goals.

"These individuals have developed a business plan, they worked with mentors, their experience in the business world and their understanding of what it takes to operate in business has increased dramatically," Gitelman said.

As the program expands, the city is also looking to create a more "structured" approach and to bring in a broader pool of applicants, according senior planner Consuelo Hernandez, who is administrating the program. Staff plans to identify at least 25 people who will be eligible to submit applications throughout the fiscal year. Each will receive a commitment letter listing training objectives that must be met before the formal grant application.

"We're trying to design a program where we provide seed finding for one year and make them as supported as they can so they succeed and they can go out and do their own things with donations or with income from their business idea," Gitelman told the committee.

Though the Finance Committee didn't take any votes on the program, members were generally excited about its objectives, achievements and proposed evolution. Councilwoman Karen Holman called the grant program "exciting," though she acknowledged that she had qualms initially about the costs of administering it. The city hopes to ultimately turn over the administration of the program to a nonprofit. Officials also hope that the businesses supported by the city's new program will be able to leverage the public money to solicit funds from private entities.

"One of our goals is to take it out of the hands of the city," Hernandez said.

Holman was particularly enthusiastic about the prospect of offering some assistance to small businesses, many of which are struggling these days to keep up with rising rents. She said the city has a lot of businesses that would satisfy the criteria in the expanded grant program, namely that they have five or fewer employees and that they hire low-income individuals.

Vice Mayor Liz Kniss stressed the need to remain informed about the program's success and praised it for allowing the city to do something different.

"It's a great way to share not just money but to share experiences, mentoring and so forth," Kniss said.

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