Giovis It’s a crying shame that in this economy the city of Los Angeles can’t find more than two companies worthy of a small business loan, when they have millions of dollars just sitting in a loan fund. On Page One of this issue, we report that the $15 million in the Los Angeles Citywide Small Business Loan Program has been virtually untouched. The city has made very little progress on its lending and job creation goals associated with the program, which launched nearly two years ago and promised to usher in hundreds of new hires. To date, about 40 percent of the program’s applicants hail from the Valley region; only one, Northridge-based Powerline Control Systems, was successful. (Check out the full list of area loan applicants on Page 32.) Just imagine if the city had pushed the envelope a little bit with the financial criteria required to qualify for these loans. It would have helped more businesses to thrive in a challenging economy and may have put more people in our community back to work. The city secured the funding for the program through a line of credit it received from the U.S. Department of Housing and Urban Development. City officials say that since the money comes from the federal government, the city is restricted in how it can be spent. The criteria used for the small business loan program is based on HUD regulations, city officials say. But federal regulations can be interpreted a myriad of ways, as the Valley Economic Development Center, the city’s contracted lending partner for the program, points out in the article. Now, granted, HUD regulations are about as convoluted as they come. But perhaps city officials should do some more research on how to better manage the program. If they haven’t talked to officials in other cities that have received HUD money, then they should. The city must find a way to take all of the strings surrounding this money and tie a beautiful bow. If the applicants aren’t qualified, then they should find qualified applicants. They’re out there somewhere. The city also should take the advice of the VEDC, which is its lending partner — and an experienced one at that. Many of the businesses that applied to the program were rejected on the basis of insufficient collateral. And yet, the VEDC provided loans to more than half of the applicants that the city rejected. Something is wrong with the big picture. What’s even more disconcerting is that small businesses have had such a bad experience with the city in applying for the program. This is not surprising, and it doesn’t help the city’s image. One applicant, Collin Colberg, owner of Camera Accessory Solutions in Van Nuys, told us the city made “it all seem unattractive and not very easy.” A few others who applied for the program, or were familiar with the companies that applied, declined to be interviewed for our article in fear that any negative comments would create trouble for their business in the future. Small businesses are the foundation of our local economy and they need all the help they can get. Banks are still tight with small business loans. And while some area banks have made strides to devote more resources to their small business lending divisions, many accountants, attorneys and real estate developers say there has been little, if any, change in lending practices. The city and the VEDC should work out their disagreements about how the program should be managed. And they should find a way to do what’s best for business — disperse the wealth and create jobs. Business Journal Editor Jaclyn Giovis can be reached at (818) 316-3126 or by e-mail at [email protected]
