For small businesses needing capital or looking for funds to start a new business, the North-central Alabama Regional Council of Governments may have the answer.
In the first quarter of next year, the agency will look to expand its revolving loan program.
NARCOG’s executive committee voted Friday to file an application to participate in the State Small Business Credit Initiative.
Revolving loan coordinator John Thornton said the state has $10 million left in federal stimulus that was part of President Barack Obama’s 2012 Small Business Jobs Act.
The Alabama Department of Economic and Community Affairs has asked the state’s 12 council of governments to find qualified applicants for the money.
“This is about job creation and helping small businesses,” Thornton said.
NARCOG already has a revolving loan fund program that has provided $9 million in loans to about 90 businesses since 1998.
Businesses that got this money qualified through banks.
Thornton and Executive Director Jeffrey Pruitt said the new money will be loaned through NARCOG, and applicants will receive business counseling before any loan is made.
“We’re going to be filling a gap, especially for new small businesses, because most banks will not loan businesses money that are less than two years old,” Thornton said.
Board members Johnny Dyar and Stanley Yarbrough questioned why NARCOG should take risks that banks are not willing to take.
Thornton, a lifelong banker, conceded that the loans have more risk, but added that a key part of the approval process will be providing business coaching.
“When we look at a plan, we may talk someone into not going into business,” he said.
Pruitt said the risk to NARCOG is that the agency has to set up a reserve fund to cover any defaults.
The state will control the reserve account and NARCOG has to pay 2 to 5 percent for each loan it makes.
Yarbrough said he didn’t oppose the application because the motion requires Thornton and Pruitt to get approval from the full board when it meets in January.
Posted: Saturday, December 7, 2013
Deangelo McDaniel can be reached at 256-340-2469 or firstname.lastname@example.org.