Philadelphia is getting ready to roll out a new loan program designed to help small landlords repair their units, and keep the city’s short supply of affordable housing intact for low-income renters.

Thanks to a $400,000 state grant awarded to the city, a limited number of eligible landlords will be able to apply for loans of up to $25,000. The money must be used for “health and safety-related” repairs, including lead abatement and fixes connected to building code violations, such as broken plumbing.

The program is expected to start early next year.

“The worst-case scenario that we’re always trying to avoid is a situation where landlords of affordable units get shut down and those tenants are out on the street, have to find another place to live or even worse don’t have another place to live,” said Gregory Heller, senior vice president of investment at the Philadelphia Housing Development Corporation.

The program will be open to landlords with fewer than 10 apartments who have a renters’ license and are up-to-date on their real estate taxes, among other qualifications.

The four-year pilot will be operated by an arm of the nonprofit Impact Services Corporation and offered to landlords in eight North and Northeast Philadelphia zip codes covering neighborhoods from Norris Square to Lawncrest.

The money must be used to repair units in those zip codes and help low-income renters earning less than the city’s area median income, roughly $65,000 for a family of three.

Landlords will have a decade to pay off the loan.

Paul Marcus, director of the Impact Loan Fund, said the loan program is a good fit for the greater Kensington area, home to some of the city’s poorest neighborhoods.

“What we’re seeing is that there’s been underinvestment in a lot of the rental units, in Kensington especially, because the landlords couldn’t expect a lot of rent if they made improvements,” said Marcus.

A standard two-bedroom rowhome generally fetches rents that run between $750 and $950 in North Philadelphia neighborhoods covered by the program, he said.

PHDC estimates the pilot will serve between 15 to 38 landlords, depending on the amount of each loan.

Derrick Cain hopes to be one of them. He’s owned a pair of affordable apartments for well over a decade, including one in West Kensington.

Cain is looking for $20,000 to winterize the single-family unit and perform a lead abatement, among other improvements. He said it’s been hard securing the loan, in part because some banks and credit unions don’t want to lend him a sum they consider small.

One bank told Cain it didn’t make loans under $100,000.

“It’s frustrating,” said Cain, community engagement editor at Resolve Philadelphia. “I’m doing one thing at a time because it’s out of my pocket.”

A new report from the Federal Reserve Bank of Philadelphia shows that roughly 40% of apartments in the region need repairs. Leaks and mold lead the way, but structural repairs aren’t far behind.

About half of the properties included in the study date back to the start of WWII or earlier.

Sherri Lee had to leave behind the South Philadelphia rowhome her family was renting because of plumbing problems in her basement. A toilet and utility sink backed up, sending raw sewage onto the floor and all over her belongings, boxed in a corner near the stairs.

“[Mold grew] so rapidly that my fiance’s jacket, my kids’ jackets, they were sitting at the top of the stairs on hooks, all have mold growing on them,” said Lee.

Heller, with the city’s development corporation, said Philadelphia has more than 100,000 units with rents affordable to households making less than half of Philadelphia’s area median income. He estimated it would take $10 million to repair all of them.

“The size of the problem is really significant … but you have to start somewhere,” said Heller.

If the pilot is successful, the city wants to find funding to expand it to neighborhoods across Philadelphia.