Kerry’s Small Business Committee Releases Guide for Small Businesses
SMALLBUSINESS
Worcester Telegram and Gazette
Rachel Kolokoff
Boston University Washington News Service
November 7, 2008
WASHINGTON – Scott Bigelow, president of Bigelow Electrical in Worcester, said it was about a year and a half ago, when many of his competitors were going out of business, that he realized he needed a loan.
“I needed to expand in areas where we didn’t have the capital,” Mr. Bigelow said, “and so I called up Benjamin Franklin Bank.”
Mr. Bigelow said electric motor supply is not a flashy business that usually catches headlines, but motors are vital to industry and for nearly a century his company has provided them to Worcester.
Through Massachusetts’ Capital Access Program, which encourages banks to give loans to small business in lower income neighborhoods that would otherwise have trouble getting financing, Mr. Bigelow applied for a loan from Benjamin Franklin Bank.
“The bank saw that we were a candidate, I signed my life away and low and behold we were able to get the capital we needed,” Mr. Bigelow said.
Administered by the Massachusetts Business Development Corporation, the program, which helps businesses with less than $5 million in revenue, has received $15 million in state funding since 1993.
Corporation president Kenneth Smith said $10 million of those funds have been used to encourage more than 100 banks to loan money to some 3,800 small businesses in Massachusetts.
Banks are more comfortable making these somewhat riskier loans because the loans are backed by a reserve account, comprised of fees paid by the borrowers and state funds.
Mr. Smith said the banks determine the credit criteria for loans and while the maximum loan is $500,000, the average is around $70,000.
“It’s extremely flexible because borrowers can use it for working capital, real estate, equipment, pretty much anything they want,” Mr. Smith said.
Because the program has helped so many small businesses, Sen. John F. Kerry, D-Mass., included it in a reference guide that describes state programs from across the country that help small businesses.
Sen. Kerry, chairman of the Senate Committee on Small Business and Entrepreneurship, and Sen. Olympia J. Snowe, R-Maine, who is the senior Republican on the committee, began more than a year ago asking governors and economic development agencies for feedback on successful small business programs.
The guide, which also includes programs from Maine, Connecticut, New Hampshire and Rhode Island, features two programs from Massachusetts.
“These ideas have been put into action and are actually working today for small businesses,” Mr. Kerry said in an October press release.
Blain Marchand, vice president of commercial lending at Benjamin Franklin Bank, said his bank has been part of the capital access program for almost four years.
“It really allows us to write loans that we might otherwise have to pass on,” Mr. Marchand said.
Maria Heskes-Allard, vice president of Clinton Savings Bank, said her bank has participated in the program for more than two years. Since then, she said, the bank has given out 7 loans totaling some $600,000 to clients that might have had a hard time getting financed.
One of those clients is Roger McCarthy, owner of McCarthy’s Landscaping and Irrigation in West Boylston, which has done landscaping design and construction for almost 14 years.
Mr. McCarthy used the loan to acquire a building where his 18-employee business could develop. In the 13 years before then, he had been working out of a garage area with only a small office for client meetings.
“It’s helped us close more jobs because clients can come into a professional atmosphere,” Mr. McCarthy said.
The other Massachusetts program in the guide is the Small Business Technical Assistance Grant Program, which awards state funds to community development corporations whose mission is helping small businesses.
“The services applicants offer small businesses can be as simple as helping them put together an accounting system, helping with various software programs, or getting on more solid ground when it comes to bookkeeping,” said Andre Porter, executive director of the Massachusetts Office of Small Business and Entrepreneurship.
Mr. Porter said the state office, which has received some $1 million in state funds for the program each year since it began in 2004, awarded grants to 29 applicants in fiscal 2008.
One of those grant recipients was the Martin Luther King Jr. Business Empowerment Center in Worcester, which offers resources, business training and low cost office space to small businesses. The center received $115,000 in 2007, some 18 percent of its total budget.
“What this grant enables us to do is provide low cost technical assistance to small business who are looking to start up their ventures or to grow them,” said Felicia Riffelmacher, vice president of the center.
InnerCity Entrepreneurs, a company that offers management training to existing small businesses in Massachusetts, also received a program grant.
Jean Horstman, chief executive officer of InnerCity, said the company has received grants for the last two years and used the most recent grant of some $40,000 to create a branch in Worcester.
In two years, the company has helped 19 small businesses access $4.1 million in new loans to expand business and generate 58 new jobs.
The reference guide of programs for small businesses is available in its entirety on the Web site for the Senate Small Business and Entrepreneurship Committee, http://sbc.senate.gov/.
###
