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Government microloans aid aspiring entrepreneurs
By Sarah G. McC. Moise
Staff Writer
After living in Vietnam for two years, Eve Blossom came to Charleston with plans to start Lulan, a company selling imported silks and textiles. Shortly before launching, Blossom decided to join the growing design district on upper King Street by opening a showroom, a decision for which she hadn’t budgeted.
“I went to Bank of America, and they said they needed two years of business history,” she says.
Although Blossom’s business plan was good, Lulan had elements that made it difficult to finance. “I employ weavers in villages and cities from five different countries to produce specific colors, fabrics and designs. It took me two years just to get the line in production. We’re not just importing whatever is out there. We use low-impact and natural dyes and very strict fair-trade, fair-wage principles.”
For minorities, people with low income or no credit record, finding the money to start or grow a small business can seem impossible. But local business development centers can help find alternative sources and offer tips on how to get started. With help from a city loan officer, Blossom received two different micro loans: one for upper King Street revitalization and one funded by the U.S. Small Business Administration for women entrepreneurs.
“Banks scrutinize startups pretty severely,” says Patrick King, loan officer for the Charleston Citywide Local Development Corp. “They usually want you to be in business a few years so they can see your track record. And they don’t offer small loans like we do.”
The LDC is a nonprofit organization, which, among its many goals, promotes and assists the growth and development of businesses, increases employment opportunities and combats community deterioration. A direct lender, LDC has made 154 loans in 26 years and has a loan portfolio of almost $25 million. In 2004, the LDC loaned $280,000 to seven clients, creating 109 jobs in Charleston. And in 2003, it loaned $796,000 to 20 clients, creating and supporting 220 jobs in businesses ranging from retail and service entrepreneurs to high tech companies, manufacturers, inventors and businesses doing rehab on downtown streets.
Manny and Clara Gonzales own a small business that also benefited from local government microlending. While expanding their business, they decided to move their shop, Tiger Lily Florist, from Meeting Street to the corner of Spring Street and Ashley Avenue. Wanting to renovate a dilapidated on-site gas station, they found traditional banks made it hard for businesses to cover any expenses outside of construction costs.
“It’s customary to ask for money for things like plumbing and electricity, but it was difficult to tell a bank I need $30,000 for things like new shelving, coolers and new display items. You have to jump through so many hoops,” says Manny Gonzales.
The LDC offers several different lending programs for business startups or expansion, lending from $20,000 to $100,000. King helped Gonzales get “community renewal” tax credits for the restoration on Spring Street, as well as assisted them in applying for two loans.
“The Façade and Corner Store program lends up to $30,000 for renovation of the façades of historic commercial or mixed-use property on King, Spring and Cannon streets to help revitalization of blighted areas. It increases the tax basis of the area and puts employees in those neighborhoods to work,” King says.
“Charleston’s very fortunate, and so is the tri-county area, to have access to LDC,” he says. “Not many businesses in other areas have the ability or the entities to go to once they have exhausted their means at conventional places.”
And, King adds, these funds are typically underused. “We have excess capacity and would be happy to do more and see more people.”
Sarah Moïse is a staff writer for the Business Journal. E-mail her at smoise@crbj.com.
SIDEBAR:
Continuing Education
In conjunction with the Service Corps of Retired Executives, the Charleston Citywide Local Development Corp. holds courses on business planning every other month for $40. The next seminar will be March 14 and 15 from 6–8:30 p.m. at the Tate Center for Entrepreneurship at the College of Charleston. For more information and to make reservations, call SCORE at 727-4778.
Contact:
The Charleston-Berkeley-Dorchester Council of Governments
1362 McMillan Ave., Suite 100North Charleston, S.C. 29405529-0400
www.bcdcog.com
Business Carolina
1441 Main St., Suite 900
P.O. Box 8327
Columbia, S.C. 29202
800-756-4353
www.businesscarolina.net
Charleston Citywide Local Development Corp.
75 Calhoun St., Third Floor
Charleston, S.C. 294032
724-3796
www.ci.charleston.sc.us
SIDEBAR:
Financial assistance for small businesses
The Charleston Citywide Local Development Corp. loans money to small business owners and startups that do not get as much as they applied for at the bank or have been turned down by at least two banks.
“Applicants need to have a business plan, and we offer technical assistance through one-on-one counseling and some classroom training,” says Patrick King, loan officer for the LDC. They also refer people to the Small Business Development Center and the Service Corps of Retired Executives, both of which are free services.
The Rural Loan Program through the U.S. Department of Agriculture provides up to $50,000 for rural businesses in the tri-county area. The Small Business Incentive Loan Program provides up to $50,000 to disadvantaged businesses for startup or expansion. And the LDC Revolving Loan Fund lends up to $75,000 and is part of the SBA Micro Loan program, which reaches some of the country’s neediest applicants.
This national program provides funds to community-based microlenders, which give technical assistance to small businesses and individuals that have trouble accessing capital. Microlenders are often more willing to take risks than a traditional lender. Business Carolina, for instance, is a Columbia-based nonprofit that makes loans to entrepreneurs throughout the state. Representing USDA and SBA loan programs, it has leveraged more than $100 million in a wide range of loan programs since 1992.
The Charleston-Berkeley-Dorchester Council of Governments’ Economic Development department also acts as a local clearinghouse for Economic Development Administration programs. It screens potential applicants, assists in the application process and administers any awarded funds. The department also is involved in applying for and distributing Community Development Block Grant Program funds, which are set aside for enhancing employment opportunities, especially for the poor.
“We have programs through the city of North Charleston and Charleston County where you can borrow in amounts starting at $5,000 for small businesses focused on job creation or retention. We have a loan fund for businesses in any region within the three counties that can make loans starting at $10,000,” says Becky Ford, economic development manager for COG.
COG administers the loan funds under the Community Development Block Grant program for the city of North Charleston and Charleston County. Application criteria for those programs include any project that starts around $5,000 and runs up to $50,000.
“The Revolving Loan Fund’s primary goal is job creation and protection. It’s a program we administer for the entire region. A business owner can apply for amounts from $10,000 up to $150,000,” says Ford. Since 1990, the RLF has loaned a total of $4.3 million to 35 business throughout the Berkeley-Charleston-Dorchester area. Those investments have translated into 1,423 jobs being retained or created.
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