Loan Plan Expands VEDC Market

The new Goldman Sachs initiative to support small businesses will enable the Valley Economic Development Center to loan money to qualified businesses in cities such as Burbank, Santa Clarita and Calabasas, which are excluded from the Los Angeles city-wide small business loan program launched last October. Through the Goldman Sachs initiative called “10,000 Small Businesses” the VEDC will receive $5 million out of a total $20 million in lending capital to support small businesses in the Los Angeles metropolitan area. “This partners well with the city-wide program, it’s a good complement to it and it is especially needed today when banks aren’t lending money to small businesses,” said VEDC President Roberto Barragan. Last year the VEDC received $15 million from the Los Angeles Community Development Department to provide loans to small businesses in an effort to help offset the economic downturn and stimulate job creation. Businesses outside the Los Angeles city boundaries could not apply for those loans. The Goldman Sachs initiative “is designed to unlock the growth and job-creation potential across the United States through greater access to business education, financial capital and business support services,” according to the company. “Working with local community development financial institutions and community colleges, we aim to give local businesses the resources they need to grow and create jobs,” said Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs, in a statement. Wider geographic area Using the Goldman Sachs funds, Barragan said their organization will make loans to businesses in a wider geographic area to be used for business expansion, job creation, capital equipment purchases and space improvements among other things. Barragan estimated $1 million-$2 million of the total funds will be loaned to businesses in the greater San Fernando Valley area including Burbank, Santa Clarita and Calabasas. The remaining $3 million will likely support businesses in the Los Angeles, Long Beach and Orange County areas. The VEDC has been supporting businesses outside the Valley for years, especially in the past two years as demand for their services grew in lieu of the credit crunch. Last year US Bank awarded $2 million to the VEDC for small business loans in Orange County and the Inland Empire. One million dollars of that has already been loaned. “Now, Goldman recognizes they can have an important role in economic recovery by assisting small businesses who are really hurting because of the credit crunch,” said Barragan. “This is especially timely because there is no sign of banks loosening their lending.” Other program funds The Goldman Sachs initiative also awards the VEDC a $1 million grant to be used for underwriting, business development and promotion of the program, as well as to provide a reserve for any loan losses, according to Barragan. The initiative “10,000 Small Businesses” also partners with Los Angeles City College and the Long Beach Community College District to offer free business management education to small-business owners. “Not only will this investment set in motion job creation at the most grassroots level, but it will have a real impact on the lives of the 70 percent of Angelenos that are employed by small businesses by granting them the opportunity to expand their entrepreneurial enterprise through education, loans, and networking,” said Mayor Antonio Villaraigosa in a statement. The initiative, which is currently also underway in New York, is expected to expand to other communities across the country.