Florida banks are expected to be more aggressive in their lending, and economic development projects are expected to receive greater support, under a small business initiative involving $97 million in federal funds passed down to a state agency.
But one local small business guru says the State Small Business Credit Initiative, announced Tuesday, may not provide the kind of help he believes small business need the most: more loans of less than $50,000.
“It’s very impressive in terms of filling the unmet needs in the commercial lending environment,” says Steve White, a consultant with Manatee’s Central Economic Development Corp. “My concern would be that start-up funding, and programs for smaller loans less than $50,000, be included. Because these are the areas that the commercial banks have shied away from.”
The $97 million coming to Florida from the U.S. Department of the Treasury is part of the Small Business Jobs Act passed by Congress and signed into law by President Barack Obama last fall. Nationwide, it involves $1.5 billion federal funds distributed to 48 states.
Florida’s funds will be used in one of three ways, said Louis Laubscher, senior vice president of chief operating officer of Enterprise Florida, which is the public-private partnership that will be managing the funds:
n About $40 million will go to the Florida Opportunity Fund, which makes venture capital investments in companies that are determined to offer a promising return on investment.
n About $30 million will go toward the state’s finance network to cover “risk pieces” that traditional lenders are unable or unwilling to cover.
n About $20 million will be used to pump up reserve funds for banks to “make it easier for them to make loans.”
One key requirement of the program is that every $1 of federal money must generate at least $10 of private investment.
“All of this funding is intended to help states get their credit programs stronger, to make business activity grow and prosper,” Laubscher said.
White, who is also a former officer with the federal Small Business Administration, praised the initiative’s focus on “priming the pump” to “restart lending from the existing lending community.”
But he said “the devil is in the details.”
“The issue will ultimately be what combination of programs and eligibility the state wishes to include in its version of the program,” he said. “Whenever you have a government program, it’s very important that the eligibility requirements are nondiscriminatory, so that it’s not a favored business of the governor.”
The state will complete those eligibility guidelines over the next 90 days, Laubscher said, and likely not receive the treasury funds until November.
The resulting loan activity and economic impact of the program will likely not be realized until sometime in 2012, he said.
Laubscher also said Gov. Rick Scott, who has built a reputation on refusing federal money, is comfortable accepting this money because it’s “in support of commerce and business.
“It’s evergreen. It’s not for a consumable purpose. It will be continual and available to the state for years to come. And when it gets repaid, it gets loaned again.”
Christine Hawes, Herald business writer, can be reached at (941) 745-7081.
