There is good and bad news from the Utah Economic Development Board.
The good news is the board endorses the concept of a private, for-profit Small Business Investment Corp. being formed in Utah.The bad news (as far as the proponents of an SBIC are concerned) is that the board won't provide $160,000 to help organize it unless some conditions are met.
During Tuesday's meeting, board members accepted a recommendation from their Special Opportunities Fund Subcommittee, which suggested that the $160,000 request from the Salt Lake Area Chamber of Commerce SBIC Task Force be considered favorably later if four conditions are met.
The four conditions are identification of an experienced management team, development of a more comprehensive management plan, pledges of a minimum of $5 million in equity capital through private letters of intent and the commitment of matching funds from other sources so the state funds would be leveraged with other public and private funds.
Peter S. Cooke, task force chairman, said the board missed the entire concept of an SBIC and called the action "irresponsible." Cooke said the task force hasn't been afforded a hearing before the board and the board's action will require the task force to take other directions.
Cooke said he has been trying to get community support to provide the $5 million while the request was being considered by the board, and the $160,000 was designed to put together a management team.
An SBIC would provide capital through loans to small businesses on the verge of expansion and fill what proponents call a gap in business financing since banks are reluctant to loan money for longer periods because of the higher risk.
Several months ago, task force members made a presentation to the board, asking for $160,000 to help get the SBIC going. The issue went to the subcommittee, whose members suggested that instead of $160,000, the board allocate $2,500 to bring SBIC experts to Utah to discuss the pros and cons.
Apparently, nobody wanted to visit the state, so David J. Grant, Utah Division of Business and Economic Development, called several SBIC officials and relayed their comments to the subcommittee before its Monday meeting.
Grant said people who manage an SBIC are very important to the success of raising money to finance an SBIC. He said a detailed business plan is necessary so the board can make an in-depth evaluation, and the information provided by the task force so far doesn't contain enough details.
He also said local financial support still is very tentative.
After learning of the board's action, R. Kent Moon, Utah Small Business Administration director and a member of the chamber's task force, said SBIC is a strong and viable resource for Utah and SBA looks forward to supporting the initiative as it develops.