Fund can help finance big dreams HOWARD COUNTY BUSINESS

August 12, 1993|By Lan Nguyen | Lan Nguyen,Staff Writer

Bob Locke has turned away many small-business owners applying for loans. After 15 years in the banking business, he's turned away so many he's lost count.

"I felt badly," he says, "but in my business, your mind has to rule LTC your heart. In commercial lending, you have to be correct 99.5 percent of the time. There's little room for error."

As senior vice president of commercial loans at the Columbia Bank, Mr. Locke has to protect depositors' interests. But as president of the Jim Rouse Entrepreneurial Fund, he's got room to spare and money to lend to start-up businesses or small businesses looking for a break and an opportunity.

The year-old fund, Mr. Locke says, is designed to do what most commercial lenders can't -- take a chance on people with little capital and big dreams.

"What we're doing is providing loans to businesses that would not qualify for loans from a commercial bank but have a viable business plan," Mr. Locke said. "I have seen many, many people come to me with either businesses that they're trying to start or have started and they make good economic sense, but I can't loan them any money. These people . . . have ability and the drive, but they don't have the resources."

The fund, named for Columbia's founder, is accepting applications for loans until Sunday.

More than 50 businesses have inquired and nearly a dozen of them have turned in a loan application, modest numbers that Mr. Locke says are manageable.

"We're only going to be able to award two to three loans at most," Mr. Locke said. "If it gets too large, I'm afraid we'll have to disappoint too many people."

Launched by the Howard County Chamber of Commerce, the program is an independent, nonprofit corporation. The fund is modeled after the General Electric Venture Fund, established in 1990 when GE closed its Columbia branch.

GE's $140,000 program helped start 14 county businesses -- 12 of which are still operating -- and create 30 new jobs at a cost of less than $4,500 per job, according to Mr. Locke, who helped coordinate the program.

Some successes from the GE program include a florist store, a small school bus contractor company, a janitorial service, a software development company and a private investigation firm.

"By making these funds available, we'll create jobs that otherwise wouldn't be created," Mr. Locke said.

Lucy Burgess, owner of Burgess House of Flowers in Baltimore, said the GE program had opened opportunities that she never had before. The former GE assembly worker, who used to operate a flower shop from her home, is now opening her second shop -- a larger one to accommodate business.

"It just turned my life around," she says. "It has been great for me."

The Rouse fund has $45,000 to lend to qualified entrepreneurs and small-business owners. It will cap loans at $20,000 this first time around, but it hopes to lend as much as $50,000 in the future when it raises more money and gets repayment on loans.

The interest rate for the loans will probably be one percentage point above the prime lending rate, Mr. Locke said. A seven-member volunteer board -- including a banker, a lawyer and an accountant -- will determine which businesses will qualify for loans, he said.

The fund is operating with $200,000 contributed by 53 businesses. Organizers hope to increase that to $1 million in the next five years. Businesses such as Chesapeake & Potomac Telephone, Baltimore Gas & Electric, Cornerstone Advertising, Giant Food Foundation Inc., the Columbia Bank and Williamsburg Builders each have donated $2,500 or more.

In addition to lending money, Mr. Locke said the fund will set up an education and support system for loan applicants. New and inexperienced business owners may have to take the three-month Entrepreneurial Training Program at Howard Community College to learn how to set up a business program, for instance.

They'll also be able to take advantage of the Business Expansion Support Team, in which new business owners can cull experience and expertise in finance, marketing and government contracts from Chamber of Commerce members.

Organizers are working on finding a location for a "business incubator" -- a 10,000 square-feet office building -- to provide affordable of

fice space, secretarial help, fax services, and other financial and managerial services that entrepreneurs can share.

Start-up companies will be limited to a three-year stay at the incubator to allow new firms the same opportunities. Organizers are working with the county to find office space by next year.

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