State to receive $17.5 million to back small-business loans
Last year when the nation’s economy began to go south, Gov. Bill Ritter pushed funding for a dormant program designed to help entrepreneurs get the bank loans they need to start a small business, operate an existing one or simply grow their enterprises.
A year later, the federal government has done the same thing, said Ritter and Gene Sperling, counselor to U.S. Treasury Secretary Tim Geithner.
As part of the Small Business Jobs Act signed into law by President Barack Obama last week, the federal government is putting $1.5 billion into a newly created State Small Business Credit Initiative, which will work much like the Colorado Credit Reserve Program.
“The small business jobs bill was probably the most significant small business bill passed in a decade,” Sperling said in a conference call Thursday with Ritter and Colorado media. “It was diverse and had multifaceted parts, including eight tax cuts. The Small Business Credit Initiative is designed to support at least $15 billion of additional private-sector lending.”
Last year, Ritter and the Legislature approved funding the state program, which hadn’t been used in years, with $2.5 million. That money doesn’t go out as direct loans to businesses, but is used to back private loans banks give to small businesses.
Since then, banks have given out 167 loans totalling about $5.24 million, and used only about $400,000 of state money to back those loans, Ritter said.
“One of the things that small business has told us pretty routinely is that access to credit is really important for small businesses,” he said. “Many of them rely upon credit for just bridging seasonal ups and downs that they experience. They have too little capital to really absorb the seasonal vagaries, so access to credit become doubly or triply important.”
Under the federal program, the state will receive $17.5 million to back many more loans, which Ritter said could help back as much as $172 million in private loans to businesses.
The governor said the state program helped create or retain about 1,100 jobs, but he wouldn’t say how many more jobs the federal money would help Colorado create other than to say it could be into the thousands.
Few in Grand Junction took advantage of the credit program, but at least one did. Eleni Sica, owner of Crossroads Wine & Spirits, used the money from a loan she received to move into a new building at 611 24 Road.