On April 12, the board of governors of the Salt Lake Area Chamber of Commerce will be asked to lend its support to formation of a Small Business Investment Corp., an organization that some people are calling vital to the state's economic future.
Members of a task force appointed by the board of governors will make a presentation and ask for support so a manager can be hired and fund-raising can begin. Although an SBIC cannot be part of the chamber because of the potential liability, task members feel the chamber's support and credibility are vital to make the organization a success.During the task force's Thursday meeting, Chairman Peter S. Cooke said he and other task force members will meet with Nick Rose, board of governors chairman, to explain the process and then Rose will meet next week with his executive committee.
An SBIC is an entity licensed by the Small Business Administration with the aim of lending money to small business, usually ones that have been operating for one to three years. Cooke said an SBIC will fill a "middle market gap" in financing by lending money for longer than one year.
He said most banks are conservative and lend money to small business for one year or less, but in many instances companies need loans for longer periods. That's where an SBIC enters the picture.
In 1986, without an SBIC, 23 loans worth $2.6 million were made to Utah businesses by SBICs, all outside of Utah. With an SBIC, task force members believe the state's economy will get a boost by the formation of new jobs, the result of added capital that allows a company to expand.
If the SBIC receives the board of governors' endorsement, Cooke said the next step will be to raise $160,000 to hire a manager and start a fund-raising process. Conversation in previous meetings indicated the need to have $1 million in the first year of operation, $2 million the second year and $10 million in the third year.
Cooke said he has taken the idea to people connected to each of the gubernatorial candidates, and they liked the idea. He said response also has been favorable from the business community and legislators who might be asked to give some tax incentives to businesses contributing money to get the SBIC going.
Task force members also talked about the possibility of getting some money from the State Retirement Fund or floating some bonds to raise some of the initial money for the SBIC.