Wednesday, August 17, 2005

Small businesses may get financing help

Developing program would fill gaps that prevent entrepreneurs from getting funding

Dana L. Bowley El Defensor Chieftain Editor

One of the biggest hurdles a very small business faces is obtaining financing to start up, expand or take advantage of opportunity.

Conventional bank financing is often out of reach for an entrepreneur with two or three employees, unless he or she has unencumbered personal assets equal to four or five times the loan amount.

And many business loan programs are geared toward larger businesses or have so many restrictive requirements that most very small operations can't qualify.

But Socorro businesses in that position could soon have access to financing via a program under development by an unlikely source — the South Central Council of Governments.

Socorro city councilors heard details about the program Monday from a consultant who is helping the SCCOG develop its business plan.

Gerald Watson, president of Greyhawk Financial Services, of Albuquerque, told councilors the organization is looking at setting up a revolving loan fund for small businesses that can't otherwise obtain financing.

"We're still early on in the process," Watson said. "Right now we're getting input on what people would like the program to look like."

Established under a grant from the U.S. Department of Housing and Urban Development, the SCCOG Small Business Finance Authority would be a separate organization overseen by a separate board of directors, Watson said. It would operate in the three counties covered by SCCOG — Socorro, Sierra and Doña Ana — with board members from each of them.

One of the goals, he said, would be to simplify the process for businesspeople.

"It would be kind of a one-stop shop" where businesses could go for financial assistance, Watson said. And the authority would help walk people through the process rather than hand them a stack of paperwork to fill out on their own.

"We'd be looking to streamline (and) expedite the process," he said.

Watson said the authority would not compete with traditional sources of business funding, and in fact, "The idea is to graduate companies into traditional financing. Our job would be to complement and fill the gaps that exist now."

He said the program would tap various funding sources from public agencies to traditional banks to micro-lenders to provide loans ranging from $5,000 to $75,000, and perhaps more.

One area in particular it would address, he said, would be businesses that need financing for new equipment in order to obtain a large contract.

He said sometimes a business finds itself in a position where it has the ability to fulfill a contract, but needs financial help to expand its operational capabilities to do so. Often the financing is hard to find because the business doesn't have the assets to qualify for a loan.

That's where this program could be of assistance, he said. In turn, helping such small businesses like that helps the communities in which they are located.

Watson said the business-planning phase for the program should be completed in 30-45 days.

The South Central Council of Governments Inc. is a quasi-governmental agency and is one of seven planning districts in New Mexico established through state and federal directives. The SCCOG works with members in planning, identifying needs, developing funding mechanisms and strategies, implementing goals, economic growth, and community developments.

editorial@dchieftain.com

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