Thanks to borrowers paying off their loans in a timely fashion, several million dollars is available to the small business community through the Rhode Island Economic Development Corporation’s Small Business Loan Fund.
"Repayment, coupled with the fact that we get a little bit of interest money from the companies when they pay us back," said EDC Executive Director Tom Schumpert, is why the organization can keep making these loans. It takes money to make money, said Schumpert, and there are currently about 135 loans that are being paid off to the EDC.
Since last July the EDC has written 45 loans to companies through the Small Business Loan Fund for myriad purposes, including expansion of their products or service lines, adding employees and increasing or improving their facilities.
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Pawtucket-based fishing tackle manufacturer Prism, Inc., which owns Atom Manufacturing, received a $100,000 loan from the SBLF last year, which it used to help purchase Connecticut-based Bead Tackle.
"It was nice because it supplemented the amount we were borrowing," said co-owner Larry Razza.
Razza said the company borrowed 75 percent of the money it needed for the transaction from Citizens Bank, and the EDC was quick to help out with the remaining funds.
Schumpert said he expects to see the money from a company like Prism in good time.
"Prism is a very good story in that they’re so dominant in their market," he said.
Terms of repayment are 10 years for real estate, 7 years for machinery and equipment and 5 years for working capital. Interest rates are Wall Street Prime plus one percent at the time of closing.
The SBLF provides financing for businesses that are unable to obtain conventional bank financing, and to businesses that need to obtain financing for 25 percent of a project’s cost in participation with private or conventional bank sources.
Christopher Crawford, president of The Corporate Marketplace, said his company used its $200,000 loan from the SBLF as a supplement to a loan from Sovereign Bank. A North Kingstown-based company, which specializes in the incentives industry, Corporate Marketplace hired a few new employees and purchased hardware and imaging equipment with the loans.
"Struggling for money is hard anyway in this day and age," said Crawford. "We were fortunate enough to be able to show people iron-clad multi-year contracts.
"Sovereign was very excited after observing that a lot of the other banks seem to approve loans too formulaically. The other banks just put the information into the computer and if it doesn’t fit, it spits it out and doesn’t approve the loan."
Schumpert said the state tries to be involved with its borrowers’ businesses.
"I personally try to spend one afternoon each week visiting directly with the borrowers to see firsthand what they’re doing," he said. "The success of the entrepreneur is critical to us, which is why the fund has been able to grow."
Another company to dip into the SBLF in the past year was New England Environmental Services in Smithfield. Todd Smith, who co-owns the company with Peter Beauregard, said the company, which specializes in waste removal and recycling fluids from the automotive industry, was able to fund an increase in its warehouse storage and hire seven new employees with its $125,000 loan.
"Our commitment to the EDC was to grow our company from 25 to 29 positions by this spring," said Smith. "As of now we’re at 32, and sales are up 30 percent from this time last year. We wouldn’t have been able to do this without these extra resources."
One of the stipulations for SBLF money includes that the project must provide for job retention and/or increased employment in the state. An eligible applicant for SBLF money is a small independently owned Rhode Island company involved in existing manufacturing, processing and other selected services.
