Startups, newly established businesses and growing small businesses based in low- and moderate-income communities across the state will soon receive a boost to their local economies thanks to a $1 million award to The Support Center by the U.S. Small Business Administration. The Support Center will use the funds to provide direct loans to startups and existing small businesses in mostly underserved markets in the Mid-western area of the state.
Authorized under the Small Business Jobs Act of 2010, the new SBA Intermediary Lending Pilot Program was awarded to 20 community organizations across the country. The purpose of the funds is to help spur local economic growth through small business lending and drive job creation.
The Support Center plans to disburse the $1 million lending fund over the next two years. It estimates that the program will help to maintain or create at least 30 jobs.
“Small Business owners who have struggled to gain access to funding through traditional banks will now have an opportunity to get the funding they need thanks to this historic investment from the U.S. Small Business Administration,” said Lenwood V. Long, President, The Support Center.
Small businesses account for a significant share of the state’s economics production and hiring; they make up 98% of the state’s employers. However, according to National Small Business Association only 64 % of small businesses are able to obtain adequate financing for their business due to the credit crunch. Small business owners are unable to grow the business, forced to reduce their numbers of employees and unable to increase inventory to meet demand.
"The Intermediary Lending Program is an important new tool to support businesses in underserved markets," said SBA Deputy Administrator Marie Johns. "Partnering with community lenders will increase points of access to capital for startups and businesses that have been disproportionately affected by the recession."
One goal of the pilot program over the next two-to-three years is to assess the intermediary model as an effective tool for increasing lower-dollar lending to small businesses and startups, particularly those in traditionally underserved communities.