Small business gets boost from unlikely source

If you own a small business that has been trying to expand or even survive, you know how challenging it can be to borrow money in today's environment of cautious - even contracted - banks. This coming November you are likely to find that your bank has had a sudden change of heart, but it's been coming a long time.

Last September, President Obama signed the Small Business Jobs Act of 2010. This act created the State Small Business Credit Initiative (SSBCI) to "help spur lending to small businesses. Participating states will use the federal funds for programs that leverage private lending to help finance small businesses and manufacturers that are creditworthy, but are not getting the loans they need to expand and create jobs." according to the Treasury Department's website (http://www.treasury.gov).

Last week Idaho received access to $13.2 million to be administered by, of all places, Idaho Housing and Finance Association (www.ihfa.org). According to them, IHFA expects the program to generate $10 in private lending for every $1 of federal money, or $132 million in new private lending in our state.

"These funds will provide critical support to state-level programs that help expand small-business lending and spur private sector job growth," said Deputy Secretary of the Treasury Neal S. Wolin. "Unlocking credit for small businesses will provide a powerful boost for investment and job creation in local communities across the country."

"The SSBCI funds are going to make a great impact in Idaho's economy," said Gerald Hunter, IHFA president and executive director. "Banks are already partnering with Idaho businesses to provide financing. The collateral funding will give them the extra assurance they need to make loans to small businesses that qualify but whose asset values might have dropped because of market conditions. These funds will help small business in Idaho grow, create employment and revitalize communities." The federal funds will be received by the Idaho Department of Commerce and administered by IHFA.

A press release from IHFA states; "This program will help Idaho small businesses receive additional collateral funding in the form of cash deposits that will be administered by IHFA but made available through Idaho banking institutions. The funds would be pledged to the lenders by IHFA and the small business as security for the qualified loan.When the loan is paid back, the savings would come back to IHFA and would be reinvested in new small business loans. If the borrower were to default, the pledged funds would be used by the lender to cover losses.

"The loans can be used to cover a wide variety of purposes, such as start-up costs, working capital, business acquisitions and expansions, or construction, among others."

The program is a collaborative partnership among the U.S. Department of Treasury, the Idaho Department of Commerce, Idaho Housing and Finance Association, and the Idaho Bankers Association. The program is in its development phase and will be launching in November 2011. Small businesses interested in the program should contact their banking institution directly in November for more information.

Relief for homebuyers was apparent last week too, with mortgage rates falling below 4 percent. A check of the IHFA website on Friday showed rates at 3.75 percent for a 30-year fixed rate with an effective annual percentage rate of 3.87 percent. We hope the approval of the SSBCI will get businesses hiring again so there are more folks able to take advantage of these cheap mortgages.

Trust an expert....call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664