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Stamford and Westport firms were among the first businesses to tapa state-backed loan fund some experts worry could be stealingbusiness from banks or setting up the state for big financiallosses. Gov. Dannel P. Malloy announced the Small Business Express Program, funded through statebonding, would provide more than $400,000 in grants and loans tofive businesses in the retail and services sectors. "The jobs created by retail and service companies are often theproduct of hardworking and determined self-employed entrepreneurs,"Malloy said in a news release. "The Small Business Express Programis proving very responsive to this important sector of our economy,one that has tremendous potential for job growth and retention." The SBE program was created by last year's Jobs Act, and Malloy'soffice said it is expected to make available $100 million tobusinesses over two years. Financial conditions are considered whengranting these loans, according to the Department of Economic and Community Development 's website. The department did not return calls for comment. There is some concern in the banking businesses the government isoverreaching, offering low interest rates to businesses thatotherwise could qualify for a private loan or could be backingfinancially unstable companies that could default on the loans. But for Catherine Cleare , owner of Catherine Cleare Interiors Inc. of Westport , one of the first recipients of a loan from the state fund, noneof those descriptions fit her case. "I would have to pay a higher interest rate," she said, indicatingshe might have opted not to expand without the state funding. The SBE program's highest rate is 4 percent, while one banker saidtypical small business loans today run between 4.25 percent and 5percent. "We are using the money to expand our marketing and hire a juniordesigner," she said. Cleare confirmed her firm is investing $57,500 of its own moneyinto the expansion effort, which includes computer and othertraining as well as marketing. "Business is getting better," she said. "We're in a servicebusiness, like general contractors and caterers, we are the firstto get hit. So when we see it get better, everybody sees it getbetter. It means hope for everybody." The Stamford Insurance Group Inc. will also participate in the program, receiving a $100,000grant after promising to match that investment as it buys newcomputers, phone systems, marketing and provides training to the 20jobs it will retain with the money. Combined, the five businesses say they will be able to retain 78jobs and add 21 new ones. There is a perception among small businesses that obtaining smallbusiness loans is difficult, Cleare said, though she had notattempted to get a loan before going through the state program. That perception puzzles Robert Polito Jr., Webster Bank 's senior vice president of government guaranteed lending. He saidhe keeps hearing the phrase "banks aren't lending." "I can't lend the money fast enough (to qualified borrowers,)"Polito said Wednesday. But he said the bank must take into account how risky an applicantis. He said in one case he had an applicant with one of the bestbusiness plans he's seen in a while, but the man also had "thehighest income-to-debt ratio I've ever seen." Polito said hecouldn't make the loan. Polito said conditions will get better going forward, even in a jobmarket that has slowed. Private companies in the U.S. added 119,000 workers in April,according to figures from ADP on Wednesday, fewer than mostestimates. But Polito said the businesses that are getting loansare strong and have proven themselves by lasting through therecession. Webster's U.S. Small Business Administration lending program still has about a 60 percent approval rate, whichis what it's been for several years. Polito said the bank offers a variety of government guaranteedloans to veterans, businesses buying buildings or in need ofoperating capital. He said balance sheets don't have to be perfectto qualify. For example, if a business came in and reported saleswere down 20 percent over two years during the recession, but hadleveled off and started to climb, they could qualify if they canshow reasonable expectations of growth based on currentperformance. While Polito worries the state might be lending money to companiesthat are high risk, he wants to see how it performs going forward. Nationally, bankers say the problem in small business lending isnot with the banks, it's the economy. The American Bankers Association reported small business loans increased more than 13 percent inthe fourth quarter of 2011 as total loans topped $1.3 trillion inAmerica. The bank said recent surveys of businesses indicate the top concernfor small businesses is a lack of sales, not access to credit. Connecticut Business and Industry Association Economist Peter Gioia said he believes the business climate warrants the new lendingprogram. "Banks are willing to lend to qualified to borrowers," Gioia said,"But businesses got beat up in the recession. They don'tnecessarily have the credit ratings they once had." He said the state might be taking on more risk, but there's also arisk to letting a business fail and put more people out of work. The CBIA surveys businesses every quarter on credit conditions andGioia said the fourth quarter survey indicated some improvement butoverall, most business people feel conditions are "fair to poor." The first quarter report is due out in a few weeks, he said, andshould provide a better idea of how things stand. The e-commerce company in China offers quality products such as China Cold Lamination Machine , Acrylic Vacuum Forming Machine, and more. For more , please visit UV Flatbed Printer today!
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