From kegs and bottles to packaging materials and professional costs, when Shaidzon Beer Co. was setting up in the months prior to its November 2017 launch, co-owner Chip Samson says there were a lot of incoming bills.
A $100,000 Small Business Assistance Program loan from R.I. Commerce Corp. in January was a windfall for the 10-employee brewery out of South Kingstown.
For the past two years, the SBAP loan initiative has supplied similar financial aid to the state’s small-business community. This fall, Commerce passed a milestone when it awarded the initiative’s 70th loan. To date, the program has loaned $2.4 million to help secure nearly $10.2 million in financial aid for local small businesses.
However, its administrators, Secretary of Commerce Stefan Pryor among them, feel more can be done to increase use of the loan program in areas in which utilization of the program is less than others.
Working with seven lending entities – Social Enterprise Greenhouse, Community Investment Corp., BDC Capital, South Eastern Economic Development Corp., Business Development Co., Center for Women & Enterprise and Rhode Island Black Business Association – Commerce helps secure financial assistance in the form of a microloan of $25,000 or less, or a loan of $25,000 or more. There is no cap on the size of the loan available from the seven partnering lenders.
In every loan Commerce has skin in the game, as the business owner does.
[caption id="attachment_237634" align="aligncenter" width="696"]
Debt for growth: Over the past two years, the Small Business Assistance Program run by R.I. Commerce Corp. has through 70 loans funneled $10.2 million to small businesses, $2.4 million of it in loans directly from Commerce RI, the rest from private lenders. The range of the loan sizes is significant, from $9,000 to $750,000. / Source: R.I. Commerce Corp.[/caption]
Of the 24 microloans, which average $17,729, Commerce paid an average $11,606 per loan. Ten of the microloans are matched 100 percent by the state economic agency and 14 additional microloans are matched to varying degrees.
The 46 remaining loans range in size from more than $25,000 to $750,000 – the highest awarded to date – with an average loan of $211,844. Commerce paid an average $47,087 for these 46 loans.
For larger loans, explained Doris Blanchard, assistant director of Supply Rhode Island and SBAP manager, when loans are approved by the seven partner lending companies, they “determine the amount of Commerce’s [input].”
Of the state’s varied economic sectors, 14 industries have so far been represented. At 17, there is a tie between retail and service for the most businesses, followed by food (10) and manufacturing (eight).
Pryor is happy to see investment, and therefore job growth, in the food and manufacturing sectors specifically.
Twenty-seven of Rhode Island’s 39 cities and towns are represented among the 70 SBAP loan recipients. By far, Providence has the most, with 20 businesses.
“Providence is a large market with many small businesses,” Pryor said of the “main reason” why the SBAP loan initiative is so well-represented in the Creative Capital. Pryor admits Commerce “definitely” needs to do a better job of marketing the program outside of Providence.
Shaidzon’s Samson said he’s met a handful of other SBAP loan recipients, “but they’re mostly in Providence and Pawtucket – areas closer to the capital.”
Agreeing with Pryor, Samson would like to see more utilization of the loan program elsewhere but isn’t sure how to spread the word. Possible avenues, he said, include local media advertising as well as chambers of commerce events.
Wanting to support the small-business community and see firms such as his thrive, Samson said, “If we could get the word out more,” further use of the SBAP loan initiative “would help increase the number of businesses that can be successful here.”
So far, one loan each has been awarded to businesses in Barrington, Central Falls, Exeter, Jamestown, Johnston, Narragansett, Newport, North Providence, North Smithfield, Portsmouth, West Warwick and Woonsocket.
Co-owner of Providence-based Riffraff LLC and SBAP loan recipient Emma Ramadan suggested more widespread awareness is possible but would need to be perspective-driven. The loan program, she said, should be marketed to every small business as a “safety net” rather than a resource to turn to when in dire straits.
“Nobody doesn’t need more money,” she said.
In fact, said Ramadan, the $30,000 loan the bookstore/bar received immediately before opening was a much-needed resource when a pipe burst in the company’s facility during its first months in operation.
“In general,” said Pryor, “We need to get the word out and [Commerce] has taken very significant steps” to do so.
Those steps include a 521-HELP hotline in which small businesses contact Commerce and are connected to lending partners, and an increased marketing effort of the loan program by the lenders to local small businesses.
Pryor realizes widespread SBAP loan utilization “does take time.” While he is “very pleased” with the current awareness of the program, and its delivery of aid to 67 businesses to date (there are three repeats), Pryor said he “won’t be satisfied until all 39 [Rhode Island cities and towns] are participating.”
Emily Gowdey-Backus is a staff writer for PBN. You can follow her on Twitter @FlashGowdey or contact her via email, Gowdey-backus@PBN.com.
