83.9 F
San Fernando
Friday, Mar 29, 2024

Officials Pushing Microloans as Saviors for Small Businesses

Officials Pushing Microloans as Saviors for Small Businesses By SLAV KANDYBA Staff Reporter Visibly emotional, Bill Herold, president of Thousand Oaks-based Conquest Technical Sales, took to the podium at a Burbank Hilton banquet room recently. Speaking before fellow business owners, non-governmental organizations and a state senator, the owner of the five-employee company specializing in sales of power supplies shared a poignant story about how a $15,000 loan from the Small Business Administration’s Microloan Program basically kept his business alive. “Had this loan not been approved, we wouldn’t have made it,” Herold said. Herold received his loan from the Valley Economic Development Center in Van Nuys, a SBA-sponsored hub which disburses federal microloans locally. The microloan program is being threatened and may be eliminated completely. President Bush did not request any funding to the program in his fiscal 2005 budget request, although Congress may end up restoring some of the funding, which was in the $30 million range in 2003. The situation has prompted State Senator Richard Alarcon to write legislation to recognize the issue, codify that microenterprise is a small business with less than five employees, and nudge state and local agencies to work together to help convince federal officials that microloan lending should remain available. A guest at Alarcon’s press conference at the Burbank Hilton March 31 to introduce the bill pointed out that microenterprises may have slipped under the radar at the federal level and until now, the state level as well. “The idea of microenterprise isn’t that well known,” said Boku Kodama, who works with Urban Voice, an Oakland-based technology training program that focuses on impoverished communities. “We know about it because we do it.” Sending a message Alarcon said he was hoping to “set the tone for local agencies” and “send a message” to Washington and Sacramento that microenterprise businesses are are an essential part of California’s economy. “It’s a step in the right direction,” said Roberto E. Barragan, VEDC director, of Alarcon’s bill. “We’re talking to all the representatives to let them know about the borrowers.” VEDC borrowers over the last six years included between 60 and 70 businesses in the San Fernando Valley. In 2003 alone, the Center made 15 loans worth more than $350,000, Barragan said. Barragan believes part of the reason federal officials is not recognizing the value of the microloan program is that they have wrong information about how much it costs. He said the cost was 33 cents per $1 loaned, as opposed to 97 cents per $1 the Bush administration claims. Frank Rincelli, a spokesperson for the SBA region covering Los Angeles, Santa Barbara and Ventura counties, said he did not have any information regarding SBA’s approach to microenterprises, technically the tiniest of small businesses. Rincelli drew attention to what he called “the express loan program” offered by the SBA, which is available to small businesses but is different from microloans. Express loans are backed by a mix of federal and private funding and borrowers have access to them through small banks, such as Innovative Bank. These small banks specialize in making loans that range from $5,000 to $15,000.

Featured Articles

Related Articles