5/3/2010 3:50:00 PM State loans still available for Missouri's small businesses
Andorra Creative owner Eric Deal, left, is using loan money to hire three staffers, including art director Tracy Turner and account executive Debbie Hopkins.
A loan program created by Gov. Jay Nixon aims to provide much-needed access to capital for some of Missouri’s smallest businesses, but with fewer than 200 applications to date and about $800,000 still available, more businesses could take advantage.
Nixon’s first official act after being sworn in as governor was to meet with young entrepreneurs from across the state, said John Fougere, director of communications for the Missouri Department of Economic Development.
Those small-business owners made clear that access to capital was their biggest challenge, and the Missouri Small Business Loan Program, launched in August, is a direct response, Fougere said.
Capitalized at $2 million with funds from the Missouri DED and Missouri Development Finance Board, the program provides low- and no-interest direct loans to small businesses with five or fewer employees.
To date, about $1.2 million in loans have been awarded to 50 Missouri businesses. Qualified applicants can obtain loans for $2,500 to $25,000 at 3 percent interest to be paid back over 10 years.
“We certainly encourage other small businesses to apply,” Fougere said, adding that the state is intent on using all of those funds. “We think this is a very important tool for small businesses to help them to thrive in this difficult economy.”
Springfield entrepreneur Eric Deal is taking advantage of the loan program to open an office at 315 Park Central East and add three employees to his one-man design firm, Andorra Creative LLC.
Without the $25,000 loan he obtained through the program, Deal said he would have pursued financing through credit cards or a conventional business loan at a higher interest rate – but he also would not have added staff. Art director Tracy Turner and Debbie Hopkins, an account executive, already are on board, with an assistant art director expected to join the team in the next few weeks.
Small-business investment For some borrowers, including Chris Dunham, the impact of the program has been significant.
Dunham said he tried to obtain financing from a couple of local banks for his company, Dunham’s Art of American Kenpo at 1322 W. Grand St., but as a small startup with little collateral, his efforts were unsuccessful.
The Missouri Small Business Loan Program has injected $25,000 into his business, which teaches American Kenpo-style self-defense, as well as motivational thinking, mind-body connection and personal development. Classes serve all ages and a variety of skill levels.
“Everything anyone learns physically is going to be of self-defense value,” Dunham said, noting that skills also can enhance fitness, self-esteem and flexibility.
The loan covers the cost of the martial arts school’s leased space and the addition of new marketing efforts, including a strategy he’s in the midst of developing. Previously, the efforts at promotion were limited to word-of-mouth, flyers and phone book advertising, Dunham said.
In Ava, a $25,000 small-business loan is helping Rode Compliance and Environmental Professionals LLC, a home-based mom-and-pop environmental consulting firm, acquire equipment that enhances its ability to subcontract jobs for major players in the environmental industry.
With a combined 22 years of experience in the industry, AdriAnn and John Rode provide services ranging from environmental risk assessments and site remediation to regulatory compliance audits and hazardous material management.
The application process The application process is fairly simple, “but at the same time, there are very stringent requirements that we utilize before we award these loans,” Fougere said. “We review applications very closely. We do an underwriting analysis; we want to make sure that each recipient is a good credit risk before we actually issue the loans because, obviously, that’s our responsibility to Missouri taxpayers.”
Dunham said the most time-consuming part of the process for his firm was establishing a formal business plan, an essential requirement to be considered for a loan. Deal, who already had a business plan in place, said the application process was very simple.
Deal thinks more businesses would apply if they were more aware of the program.
“I heard about it through a business networking group,” he added.
In addition to providing a business plan, applicants must indicate how they will use the funds and provide details on their finances.
A team of staff members from the Department of Economic Development and the Missouri Development Finance Board makes the loan determination.
“If we determine that and they have a business plan that we think is sound, we go ahead and award the loan to the applicant,” Fougere said.
