Small businesses praise state loan initiative
State officials said they would work to ensure a fund to provide low-interest loans for small businesses struggling to access capital during the economic and credit crisis would be part of the state budget.Posted — Updated
The Small Business Assistance Fund received $3 million in the budget passed by the Senate last week. Golden LEAF, a foundation that directs money from the national tobacco litigation settlement to economic development projects, also plans to invest $5 million in the revolving loan fund.
Lt. Gov. Walter Dalton, who conceived of the idea, compared it to state disaster-loan programs administered by the Small Business & Technology Development Center.
"This is not a natural disaster; it is an economic disaster," Dalton said. "In natural disasters like (Hurricane) Floyd and the floods in the mountains, we put out money to help small businesses to get back on their feet."
Businesses with fewer than 100 employees or annual revenue of less than $1 million could use the loans to guarantee commercial loans, as emergency bridge loans or for other purposes to preserve jobs. Since it would be a revolving loan fund, interest and loan repayments would go back into the fund, providing capital for more loans.
Tony Marshall, owner of Raleigh-based Innovative Systems Group, said such a loan could be the cash infusion his company needs to manufacture dim compact florescent lighting on the commercial level.
"An investment of $400,000 would bring us jobs, get us manufacturing and also save us energy. We think it's a worthwhile investment," Marshall said, adding that he hasn't been able to find that capital in the private sector.
Dalton said the loans would go to such businesses as Marshall's that, he believes, are essential to the state economy.
“During this economic crisis, we’ve watched as big business received massive bailouts, but not enough attention has been paid to small businesses, which really are the foundation of our economy,” Dalton said.
"As I have talked with small business owners, I have heard loud and clear that more help is needed and providing these loans is a powerful step," he continued. "With our state unemployment rate at 10.7 percent, we must do everything we can to keep small business strong. "
Rep. Jim Crawford, D-Granville, pledged to work to keep the funding in the House version of the budget.
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