Business fund is set up to help small firms expand
24th September 2012 · 0 Comments
By Zoe Sullivan
The Mayor’s Office announced a new small-business loan program on September 18. According to a press release, a fund of $2 million will support loans “to encourage small business expansion and job creation.” The fund, christened The New Orleans Small Business Assistance Fund (SBAF), is the offspring of a partnership between the city and NewCorp, Inc. and will serve new and existing businesses. According to Siona LaFrance, a spokesperson with the Mayor’s Office, the loans will be made for amounts between $10,000 and $100,000.
The SBAF will offer loans at eight percent to both profit-driven and non-profit entities. These loans can be used for “operating capital and equipment purchases.” In order to be eligible for a loan, borrowers must live in Orleans Parish and show that they have tried to obtain funds from other sources without success. Additionally, the businesses must “provide living-wage employment and ownership opportunities to low-to-moderate income communities.”
LaFrance explained that HUD [U.S. Department of Housing and Urban Development] standards would be used to determine whether applicants meet the living wage requirement.
According to the New Orleans Community Data Center, studies on living wage standards in New Orleans have not been updated since 2003.
In the press release, Mayor Landrieu is quoted stating: “I am committed to growing our small businesses and creating jobs in our community…This initiative is yet another example of how we can build capacity among our local businesses, remove obstacles to capital and ensure their inclusion in local opportunities.”
Small businesses have suffered during the financial crisis as credit has been cut off to many. The Small Business Administration reported in July of this year that lending to small businesses between 2010 and 2011 fell by 6.9 percent, an amount worth $45.3 billion. This drop exceeded the 6.2 percent decrease registered between 2009 and 2010. In this context, efforts such as the SBAF program attempt to make up for some of the challenges to obtaining credit that many small businesses have had to negotiate.
In the press release, Vaughn Fauria, President and Executive Director of NewCorp Inc., affirmed this purpose, stating: “The Small Business Assistance Fund program presents an opportunity for the small business person and the entrepreneurial community, that have not had access to capital and coaching assistance, to access those resources now.”
The SBAF program is not the first effort from the Mayor’s Office to stimulate local businesses. Early in 2011, the Mayor also touted a partnership with Goldman Sachs, which has come under fire for its lending and investment practices. Under the partnership, Goldman Sachs provides support for a lending and training program run with Delgado Community College. The aim is to help 10,000 Small Businesses expand and learn new management skills.
Information sessions have been scheduled through the end of September and early October in each City Council District. The meetings will be held on Tuesday and Thursday evenings from 5:30 to 6:30pm. The application period will open on October 1 and will close on October 31. Applications will be available at the public information sessions as well as through NewCorp, Inc.’s web site: www.newcorpinc.com.
In addition to completing an application, potential borrowers will also have to submit the last three years of their business and personal tax returns, the articles of incorporation for the business, and, for start-ups, a business plan, along with other documents.
The information session for Council District A was held before The Louisiana Weekly went to press. Upcoming sessions will be held at:
Council District B, Tuesday, September 25, 2012, Rosa Keller Library, 4300 S. Broad Street
Council District C, Thursday, September 27, NOPD 4th District Office, 2045 Sanctuary Drive Council District D, Tuesday, October 2, Dillard University Professional School Building, 2601 Gentilly Boulevard
Council District E, Thursday, October 4, NOPD 7th District Office, 10555 Lake Forest Boulevard
Half of the funds for the program will come from the City’s Economic Development Fund. According to the Mayor’s Office, this fund is fed by an annual millage tax directed at economic development. The other half have been pledged by NewCorp, Inc.. NewCorp, which will run the SBAF program, is a Community Development Financial Institution. As such, it has been certified by the U.S. Department of the Treasury. Community Development Financial Institutions, which also include credit unions, target under-served communities and provide access to credit and financial services.
This article was originally published in the September 24, 2012 print edition of The Louisiana Weekly newspaper