By Patrick Anderson
PBN Staff Writer
(Updated, 4:05 p.m.)
PROVIDENCE – The city has suspended a program providing $50,000 loans to startup companies that promise to stay in Providence for at least a year.
The federally-funded, city-administered Innovation Investment Program launched in November 2011 and was open to startups being backed by the Betaspring startup accelerator, Slater Technology Fund or Cherrystone Angel Group.
In those 18 months, the program, initially pegged at $1 million, has churned through $1.65 million in loans to 32 companies.
All but two of the loans, or $100,000, has gone to graduates of Betaspring, which offered the financing to each class of companies entering the accelerator, said Betaspring spokeswoman Melissa Withers.
That includes the 15 companies in Betaspring’s current class, which has now been told that financing will no longer be available.
Withers said city officials told Betaspring Wednesday afternoon the program was being suspended because it had exceeded its intended size, but nothing else about the timing or rationale behind the decision.
“I think it is important not to underestimate the importance of $50,000 for startup companies,” Withers said. “It is a bridge fund that lets them settle in Providence.”
Withers said the 31 Betaspring companies who took advantage of the city loan raised $4.6 million in private capital and she is not aware of any who have since left the city, including those who are past the one-year time period.
City officials have not immediately responded to calls for comment on the program.