A new revolving loan fund will accept applications from companies having difficulty making payroll, a Connecticut official said, if they can prove they are on the cusp of receiving contract payments sufficient to pay off any loan.
As part of his jobs bill under consideration by the Connecticut General Assembly, Gov. Dannel P. Malloy proposed a $180 million “jobs express package” that includes $50 million for a revolving, low-interest loan fund and hiring incentives.
State Sen. Kevin Kelly, who represents Stratford, Shelton and Monroe, said his small-business constituents have suggested the state provide a mechanism for them to access working capital when needed, saying while banks in his district are extending credit for equipment or real estate, they are less inclined to do so for working capital needs such as cutting paychecks.
“Many of these companies have the jobs, they have the work,” Kelly said, while querying state officials on the jobs express package in October. “But the small-business manufacturers don”™t have the capital to meet the next nine months of payroll to do the job and deliver it ”“ knowing, however, that in nine months they are going to receive the money.”
Smith said the revolving loan fund is intended to fill that very purpose, among others.
“I think we will take all comers to the revolving loan fund,” said Catherine Smith, commissioner of the Connecticut Department of Economic and Community Development. “We will want ”¦ to make sure that the company isn”™t about to go out of business, but I think if we see a good story and an opportunity for them eventually to pay back the loan we will absolutely be willing to provide the short-term cash needs.”
Smith promised that incentives under the jobs express package will feature a one-page application and a five-day turnaround time. Malloy also wants to spend up to $1 million to update the state”™s CT.gov websites with an eye toward making it easier for businesses to find the information they need, without specifying whether it is eyeing a layout already being used successfully by another federal or state agency or other organization.
“This will be much simpler ”“ an easy entry point for business,” Smith said. “Once they get to this portal they will be able to find all the things they need to do from a click or two away.”
Despite previous criticism in some quarters that small-business owners do not hire workers to get a tax credit of a few thousand dollars, Malloy is nevertheless attempting to sway them by upping the ante. The new tax credit will offer a $500 payroll tax deduction monthly for each employee hired, rather than the $200 credit on the books today ”“ and hiring a veteran, a person currently without a job or someone with a disability will result in a $900 monthly deduction ”“ or nearly $11,000 for a calendar year.
A company has to keep the employee on for a full year to become eligible for the tax credit and it can take the credit for each of the following three years provided it keeps the worker on the payroll. Partnerships and other non-corporate structures are eligible to take the job-hiring tax credits.
“The program has been in place for a while; it has had very little take-up,” Smith said. “The idea here is that the employer gets to deduct a portion of their payroll tax for each new employee that they hire ”¦ to really try to trigger some real activity in this arena.”
