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County gets $500,000 grant for small businesses

December 28, 2001|By LAURA MITCHELL, Staff Writer

The county received a $500,000 Christmas gift from the state this month to fund local business loans aimed at keeping or creating jobs in the county.

There are businesses that will lay off employees or close completely if they do not get financial assistance, county Economic Development Department Director Ken Hollis said.

The loans are aimed at small businesses of 500 employees or less, but just about every business in the county is a small business, Hollis said. The EDD office will focus on helping businesses in unincorporated areas of the county.

The grant money is available for 18 months, or until it is all used, he said. The grant will be added to a revolving loan fund, which means, as loan payments come in, the money goes out again as new loans.

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Trish Ferrand, economic development coordinator at the EDD, said the grant is needed because the department has more loan applications than can be funded.

The department had loan requests in July and August for more than $500,000 that could not be funded, Ferrand said.

As of Dec. 12, the program had $477,293 outstanding on 24 loans. The average loan balance is about $20,000, some loan balances could be as little as $5,000 and some might be as much as $40,000, she said.

Hollis said the program has a successful payback record because loan payments are structured on a business' ability to repay.

Generally, the county is not the primary lender, he said. All business seeking a loan are required to approach banks first.

If a business can get a bank to finance most of the loan, EDD will cover the rest, he said. The grant money decreases the bank's risk and the county benefits because businesses have to meet a bank's credit standard for a loan.

Ferrand said once a business has established it is credit worthy, the department's priority is funding loans that can bring the best economic impact for the money.

Statewide, Imperial County does well applying for these grants, because of its high unemployment rate, said Larry Davis, senior development specialist with the state Department of Housing and Community Development, which is funding the grant.

The EDD has funded at least $700,000 in loans since the program started in 1995, Ferrand said.

The grant money should be available in February. Loans can be approved in two weeks and will be given out on a first-come, first-served basis, Hollis said.

>> Staff Writer Laura Mitchell can be reached at 337-3452 or lauramitchell9@yahoo.com

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