State budget plan adds small-business loan funds

Gov. David A. Paterson's proposed budget includes two new loan funds to support small businesses.

The budget includes a $25 million Small Business Revolving Loan Fund and a $25 million New Technology Seed Fund.

"The goal is to get more capital into the hands of small businesses who are having trouble with receiving financing," said Stephen R. Cohen, deputy commissioner of the state's Empire State Development Corp.

The fund proposals would have to be approved by the state Assembly and Senate.

The revolving loan fund would begin with a contribution from the New York Power Authority, according to the Division of Budget Web site, but would be sustained as businesses pay back the loans. The money would be disbursed to alternative lenders, such as local development corporations and credit unions, through an ESD proposal process.

Women and minority business owners would be given priority and the money would be spread out regionally.

"In this region, like most of New York state, small businesses are having difficulty accessing capital to expand and purchase equipment," ESD regional director James P. Fayle said. "We're seeing the need and the desire, but they're having difficulty getting access to capital."

The technology seed fund would support companies that are trying to bring products to market. It would operate as an equity fund and the fund managers, selected by the ESD, would give priority to small businesses that demonstrate promising commercial potential.

The stage of getting a product to market is frequently called "the Valley of Death" for technology-based companies, Mr. Cohen said.

"We want to create another Silicon Valley here in terms of a robust network of investors to fill the gap at the seed stage," he said.

The fund would be supported by money from the ESD and matching funds.

ESD staff is touting the new and existing programs at events around the state, including a visit Feb. 25 to the entrepreneurial training course through the Small Business Development Center at Jefferson Community College.

"It was a good target audience of business owners," Mr. Fayle said. "Many of them were unaware of some of the programs that already do exist."

To address that need, the ESD has published directories of small-business programs and alternative small-business lending programs on its Web site.

"There are a lot of economic development funds out there, but business owners don't necessarily know about them," he said.

ON THE NET

Empire State Development Corp.: www.empire.state.ny.

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Division of the Budget: www.budget.state.ny.us/

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