In a bid to spur the availability of capital to small business in New York, Empire State Development is reaching out to community development financial institutions as well as community-based lending organizations.
The ESD will make money available via the Small Business Revolving Loan Fund to CBLOs at low interest so as to encourage loans to small businesses that are having trouble getting capital from traditional lenders or can”™t get workable terms for their loans. Â ?The $50 million revolving loan fund was designed to create economic activity by providing greater access to capital for “Main Street everyday small businesses,” according to the agency.
“The goal is to not decrease the cost of capital for lenders, but to actually increase the amount of lending to small businesses,” said Steve Cohen, deputy commissioner at Empire State Development where he heads the Economic Empowerment Department, which includes the Division for Small Business, the Division for Minority and Women Business Development, the Empowerment Zones Corporation, the Affirmative Action Unit, and the Economic Revitalization Unit.?Cohen was speaking on a conference call Sept. 7, in which agency officials discussed the revolving loan program.
The new program is open to CBLOs including small business lending consortia, certified development companies, providers of U.S. Department of Agriculture business and industrial guaranteed loans, U.S. Small Business Administration loan providers, credit unions and community banks.?Loans to CBLOs will be made at 1 percent for seven years. Terms may be extended if performance standards are met. A credit enhancement is available for nonprofit CBLOs; up to 10 percent of the program loan principal will be forgivable to cover certain eligible net small business loan losses of state invested funds.  Full program details are available in the request for proposals.?The  Governor ”™s Small Business Task Force identified this as a vital need in 2007 and initially proposed the creation of the program. Creation of the revolving loan fund was “a core recommendation” to address the ongoing capital crunch, Cohen said. The program aims at “developing structures of alternative lenders in a way that is less cumbersome than some revolving loan funds”?The 2010-11 state budget provided $25 million in state funds and will leverage at least $25 million in private matching funds.
“The goal is to get that capital out to small business within two years,” Cohen said. The deadline for CBLOs to reply to the RFP is Sept. 30.?For more details go to esd.ny.gov/BusinessPrograms/SBRLF.html.
