The Connecticut Main Street Center, a nonprofit focused on developing and sustaining vibrant downtowns within the state, recently held a webinar to explain how small-business and nonprofit owners can take advantage of free technical assistance and loans of up to $500,000 through the Connecticut Small Business Boost Fund, a program supported by the Connecticut Department of Economic & Community Development (DECD).
Kevin Gremse, senior director at the National Development Council, told the webinar audience that the Boost Fund loans were based on lessons learned from other statewide lending efforts and other Community Development Financial Institution (CDFI) programs across the country
“In New York state, we were one of those CDFIs and we found that when we lent to small businesses and nonprofits most of those loans wound up being less than $100,000,” Gremse said, noting that the loans were capitalized with investment from the state. And while the CDFIs involved management to raise over $100 million from banks, they learned that banks were reluctant to give small loans and even more hesitant to engage in direct lending to underserved communities.
As a result, Gremse explained the Connecticut version of the program would instead see the capitalization come through private funds matching public sector investment. This will also make it easier to provide the loans to underserved communities and women- and minority-owned organizations, he added.
“What we had pledged is to match every dollar of state assistance with dollars that we raise through our bank partners,” Gremse said. “It’s very targeted to those businesses that need smaller loans. In the case of the Connecticut Boost Fund, we may do loans as large as $500,000 but we are going to limit loans over $150,000 to 10% of the [business’] portfolio.”
Twenty-five communities across the state have been labeled Designated Distressed Communities by the DECD. Bridgeport is the only designated community within Fairfield County on the list, with many falling within the central and northwestern parts of the state ”” however, businesses in any locality within Connecticut can apply for the Boost Fund loans.
The loans have a 4.5% fixed interest rate and a 60- to 70-month financing period, and they are designed to finance upgrades or “boosts” in a business, as opposed to real estate acquisition or major expansions.
“Those are very small loans to banks,” Gremse noted, adding they would be unlikely to receive traditional underwriting. Additionally, those accepting the loans will be required to work with groups that will provide technical assistance in making use of the money such as the Connecticut Small Business Development Council (CTSBDC).
“The Small Businesses Development Council’s development centers provide counseling and training to small businesses including working with the Small Business Administration to develop and provide informational tools to support startups as well as existing businesses,” said Scott Arnold, a business adviser with the CTSBDC. “We can help applicants, especially with the Boost Program or any type of loan program determine their eligibility, understand the program’s details and conditions.”
However, Arnold stressed the loans will need to be repaid ”” they are not grants and are not eligible for forgiveness. According to Arnold, many business owners still do not grasp these distinctions.
Connecticut Main Street Center Field Services Director Carl Rosa outlined some of the purchases that the Boost Fund can accommodate.
“A lot of times these funds are used for marketing,” Rosa said. “I know that a lot of mom and pops don’t always have the money to spend on marketing, it’s considered something of a luxury on their part. But if you have a really good, effective website, especially as a retailer, you can gain the ability to sell online as well as generate actual foot traffic to your business.”
Technical assistance provided through the program can also be used to help develop marketing plans, Rosa added, while the loan itself can cover the cost of building an enterprise grade website. He also listed expanding inventory, upgrading point-of-sale systems, and revamping the layouts of eateries as common choices. Fresh signage and an attractive store front to ensure curb appeal were also mentioned as ways to improve not only the business itself but an overall “Main Street” feel.
Details and application materials for the Boost Fund can be found online at CTSmallBusinessBoostFund.org.
