The Watertown Local Development Corp. will bring back a loan program designed to help businesses affected by construction on Public Square, the agency announced Thursday.

The agency, also known as the Watertown Trust, agreed to set aside $100,000 for the downtown loan assistance program, to be handed out in increments of $10,000.

The Watertown Trust created the loan program last year in an effort to support small businesses that were hurt by road construction.

Unlike last year, when the loans were open to any business on Arsenal and State streets, the 2008 funds are limited to downtown businesses specifically affected by the Public Square construction.

To receive the loans, applicants last year had to show they had good credit and provide a letter detailing the impact of the construction on their business.

Some 20 businesses received the five-year loans, which have an annual interest rate of 3 percent. Loan recipients were given a year of interest-only payments before they had to start paying down the principal.

Donald W. Rutherford, Trust executive director, said the same terms would apply for the new round of loans.

The Watertown Trust will offer loans to new applicants until the end of June. The agency plans to make any remaining funds available to any of the 20 businesses that borrowed $10,000 last year and want to take out a second loan.

The Trust intends to be flexible when it comes to helping those affected by construction, Mr. Rutherford said. Should the agency run out of loan assistance funds by the end of June, he said, the Trust would still try to work with any business on Public Square that needs help.

Rather than add a second loan, for example, Mr. Rutherford said, the Trust might consider extending the interest-only payments for existing loans to 2009. He cautioned that such a plan would have to be approved by the board.

"Our funds are not unlimited," Mr. Rutherford said. "We wanted to start with $100,000 and see what kind of response we get."

Also on Thursday, the Trust said farewell to departing board President Douglas B. Schelleng.

Mr. Schelleng, economic development program administrator for the Empire State Development Corp., announced in April that he will take a new position with the ESD office in Troy.

"I have a great deal of fondness for this organization," Mr. Schelleng told his fellow board members at his last meeting. "It's been very professionally rewarding to see us transition to a broader role in community development."

Watertown Mayor Jeffrey E. Graham, who will step into the role as board president, gave Mr. Schelleng a city coin and a certificate denoting him as an honorary Watertown native.

Mr. Rutherford presented Mr. Schelleng with a plaque to commemorate his years of service to the Trust.

The board appointed Mark Bellinger to serve the remaining 2008 term as vice president, Jennifer L. Huttemann-Kall as treasurer, and Jenna Cleaves as secretary.