More cash available for small businesses

Cordray said previous
officeholders didn’t
promote the program.

By MARC KOVAC

VINDICATOR CORRESPONDENT

COLUMBUS — State Treasurer Richard Cordray has increased the dollar limits available through a small business loan program with hopes of reversing lagging participation in his office’s main economic development offering.

Speaking to reporters Wednesday in his ceremonial office at the Statehouse, the Democratic officeholder said about 156 businesses took advantage of the state’s Small Business Linked Deposit Program last year, down from 1,526 in 1998.

And only a fraction of the $500 million in loans available is being tapped today.

“To me, this represented a surprising and massive wasted opportunity,” Cordray said, adding, “At a time when we’re in an economic crisis in terms of creating and retaining jobs in Ohio, one of the significant programs that can pump a lot of money into the economy … was going virtually unused.”

Lawmakers established the program in the 1980s as a means of leveraging private financing.

The state treasurer does not make loans directly to borrowers. Rather, the office is authorized to purchase certificates of deposit from local banks. It accepts a lower interest rate of return on those CDs in return for banks’ willingness to make lower-interest loans to eligible small businesses.

Businesses have used the program to purchase equipment or facilities or to start or expand operations.

Funds

Currently, the treasurer is authorized to secure about $500 million in financing through the Linked Deposit Program.

Last year, however, only about $23 million had been used.

That compares to $253.6 million in loans through the program in 1998.

Part of the decline can be attributed to lower interest rates in recent years. Cordray said previous officeholders were not promoting the program and had no staff dedicated to it.

“People had forgotten about the program or stopped applying,” he said.

To reverse those trends, Cordray said he has reallocated his staff resources to ensure the program is covered. He also has increased the individual loan caps to $400,000 from the $250,000 and doubled financing offered per job created or retained to $50,000 from $25,000.

Loans are offered at 3 percent below the prime rate. The funding is important for small businesses — those with fewer than 150 employees — which often rely on personal credit lines or higher-rate loans to pay for capital needs, Cordray said.

Applications are available through the treasurer’s office Web site www.tos.ohio.gov.