County fund to aid small businesses proposed Commissioners to explore option for those rejected by banks in bid to expand

September 04, 1998|By James M. Coram | James M. Coram,SUN STAFF

The County Commissioners agreed yesterday to explore the possibility of establishing a revolving loan fund for small Carroll businesses looking to expand.

If approved, the fund would use state and county money to provide loans of up to $50,000 to small businesses that cannot otherwise obtain funding, Mike Fish, a business counselor with the county Economic Development Department, told the commissioners.

The commissioners expressed concern that the fund not compete with local banks or with Carroll County Development Corp., a consortium of local banks that offers start-up and expansion loans to small businesses.

The revolving loan fund would complement rather than compete with that effort, John T. Lyburn Jr., Carroll economic director, told the commissioners. The county has programs to help larger businesses grow, but "not very much for small businesses," Lyburn said.

He worked with Montgomery County officials and the state legislature the past year to create a program that would help counties provide loans to small businesses, Lyburn said.

The result is a program administered by the state Department of Business and Economic Development, which may give counties up to $500,000 between now and June 30, 2003, "to assist various local development projects which otherwise could not be financed from traditional private sources" or other public programs.

An agency, such as Carroll's Industrial Development Authority, is needed as a conduit for the funds because the commissioners cannot lend money to private individuals, said Isaac Menasche, a senior assistant county attorney.

The county created the quasi-public Industrial Development Authority in 1980 to market and develop the county's Air Business Center in Westminster. That role might be expanded to include helping small businesses, if the revolving loan fund is established.

The county must match any money it receives from the state to establish the fund. Lyburn proposes initially seeking only $100,000 of the $500,000 available, to work out any bugs in the administration of the program. Matching funds would come from his department's $1.1 million trust fund, he said.

The money would be used to assist retail and commercial businesses, but not industrial businesses -- which have other avenues for seeking assistance, Lyburn said.

When asked to provide an ex- ample of how the fund might be used, business counselor Fish said, "A business might be renting space that it wants to buy in order to renovate the upstairs."

A condition of the loans is that they must be 100 percent collateralized. The collateral in his example would be the assets of the building and the owner's personal liability, Fish said.

"I'd like to know the structure under which we're operating," before the revolving loan fund concept is approved, Commissioner W. Benjamin Brown told Menasche and the economic development officials.

"We ought to have the ability to be creative and the interest rates ought to be low," he said.

Lyburn and Menasche are to return with a recommendation for implementation of the revolving fund program within three weeks.

The proposal "sounds interesting," said Helen Utz, executive director of the Carroll County Chamber of Commerce. "Anything to help small business could be beneficial."

The commissioners, all of whom are seeking elective office this fall, are particularly sensitive to allegations that Carroll is anti-business, having made it their top priority in the noneducation portion of the budget.

Carroll's business tax base is the lowest in the Baltimore region, providing slightly less than 12 percent of Carroll's tax revenues.

The commissioners have given Lyburn a virtual carte blanche to do whatever he can to help existing businesses grow or bring new ones to the county.

However, many Carroll candidates seeking election this fall are saying in political forums that it is not enough. The county has an anti-business image and is not doing enough for local companies, they say.

Pub Date: 9/04/98

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