April 24, 2014

U.S. offers Kansas small businesses a $13 million boost

Gene Meyer
KansasReporter
TOPEKA, — More than $13 million in federal seed money for small business loans is headed toward Kansas, state officials and the U.S. Treasury said Wednesday.
The funds, which were awarded under state small business credit initiative created by the federal Small Business Jobs Act signed last September, are meant to be matched with funds that small business owners raise privately as earnest money to qualify for what would become more than $132 million in loans from participating banks.
“The program gives Kansas another tool to help us grow the economy and create jobs,” Kansas Gov. Sam Brownback said in a statement announcing the funding.
However, officials at the Kansas Department of Commerce, which will run the program, were unable to say how the new plan might fare against two bigger problems that banks say hamper business lending. Demand for business loans remains anemic as potential borrowers wait for surer signs of economic recovery before taking on debt and, bankers say, bank regulators in the new world of post-Troubled Asset Relief Program are too quick to clamp down on business loans that previously would have seemed sound.
The Independent Community Bankers of America, representing about 8,000 community banks throughout the U.S., told a U.S. Senate banking committee last year that more than 52 percent of the members they surveyed said they’d cut back on business lending as a result of questions regulators raised during safety and soundness examinations otherwise might threaten their ability to make other loans or raise capital.
Nearly four in ten, or 37 percent, also said a lack of loan demand also was curbing business lending. Only eight percent said access to credit, which is the problem addressed by the new initiative, was a hurdle.
Of the funding announced Wednesday, $10.5 million will be allocated to the Kansas Capital Multiplier Loan Fund, which the state commerce department, through its NetWork Kansas program, provides support for entrepreneurs and existing small business across the state while they gain financial footing. Another $2.6 million will be dedicated to the Kansas Capital Multiplier Venture Fund, which similarly helps established small businesses to expand.
In both cases, loan applicants will pair federal money with funds they’ve raised privately to put up 9 percent of business loans between $10,000 and $250,000 they hope to borrow on regular commercial terms from their banks, said Dan Lara, a Commerce Department spokesman.
It will remain the banks’ job to look at those loan applications as they would any other applicants and determine whether the loan would be a good one, Lara said.
“But they would be more willing to make the loans because the 9 percent private capital means less risk,” Lara said.

Comments

  1. Well, if you have a small business owner struggling then I would say the last thing they need is another debt to take on. And the last thing our federal government needs to be doing is offering these funds since we don’t have any money and are borrowing big time from China to keep the doors open. These loans won’t create new jobs in my opinion – it is just another propaganda program put out there by the worthless politicians.

    Wonder if the politicians who will be handing out these loans are checking to see if the applicants are worthy of a loan such as whether the guys there with their hand out have paid their taxes and been financially responsible to their community (think about the jerks in this town getting their benefit districts and are not worthy of them). Just like during the housing debacle, they may be handing out loans and not even checking to see if the businesses have any income or whether they can afford the loan and you know who will end up bailing them out.

    Our government and the political system is so screwed up and so corrupt it is a wonder the bottom hasn’t fell out like it is about ready to do in Greece. We CANNOT continue to spend money we do not have and every government entity, starting with the CITY OF GARDNER, better get that thru their hard and conniving heads.

  2. P.S. 9% Down is not enough – should be more like 20%.

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