The U.S. Department of Housing and Urban Development has awarded the state of Utah a $971,000 grant to develop a revolving loan fund to help Utah businesses.

Administered by the Utah Technology Finance Corp., the Utah Revolving Loan Fund's first phase will be used to aid businesses in Provo and Orem. In the second phase, the fund coverage will be extended to selected associations of government, small cities and rural Utah.The third phase will extend the coverage to all parts of the state.

In the first year, the HUD money will be supplemented by $200,000 from UTFC and $100,000 each from Provo and Orem for a total of nearly $1.4 million. A one-to-one match with private funds will further leverage the fund.

The goals of the funds are to:

- Provide leveraged lending for technology-based ventures with high-growth potential.

- Integrate financing with other economic development programs concerning activities related to the success of technology-based, high-growth companies.

- Develop private-public relationships for the financing of technology-based enterprises

- Create jobs in accordance with HUD and state objectives.

To be eligible, an applicant must be a small business in Provo or Orem and preference will be given to technology-based businesses manufacturing a product. Eligible uses of the funds include operating capital, machinery and equipment.

Debt financing and acquisitions of land and buildings aren't eligible for funding, said Richard E. Turley, UTFC executive director. Applications for money will be taken by managers of existing loan funds in Provo and Orem.

The funding is not a substitute for private financing, but is targeted to leverage private financing and to fill existing gaps in the financing markets. The fund will solicit loan participation from commercial lenders, Turley said.