Nearly half a million dollars in federal funds to help finance new and expanding small businesses has been approved for distribution in four southeastern Utah counties.
The Southeastern Utah Association of Local Governments will receive $400,000 in matching federal funds to add to $150,000 in a state Community Development Block Grant approved earlier to establish a revolving-loan fund for business development in Carbon, Emery, Grand and San Juan counties.William D. Howell, executive director of the association of local governments, this week announced in a news release that the funds were approved Feb. 13 by the U.S. Economic Development Administration in Wash-ing-ton, D.C.
The association office submitted application for the funds last year as a step in an ongoing strategy program for economic recovery in areas experiencing severe losses from the decline of mineral extraction industries.
The revolving-loan fund will be available for "gap financing" for small-business start-ups and expansion of existing firms, said Dixie Barksdale, loan fund manager and association economic development professional in Moab. Gap financing is the difference between the amount a company is able to obtain from a primary lender and the equity needed by the borrower.
"The revolving-loan fund is money lent out, and as payback occurs, it revolves back into the fund to lend out. And of course, the interest rate is lower - up to four points below prime rate - which helps to moderate the interest (on loans) a business pays," Barksdale said.
She said governmental revolving-loan funds can make a critical difference when private lending institutions are unable to lend a business the amount it needs to complete a project.
The association will begin accepting pre-applications for loans April 1.
"To be eligible, it must be a for-profit company, those that have the most potential to create jobs in the area and to fill needs for services and products in the area. In other words, they represent a target (industry) for the area," Barksdale said.
A number of entrepreneurs who participated in a series of workshops this past year on starting small businesses have expressed interest in the loan fund, she said.
"We've got one that's an organic fertilizer company. One company may be needing funds to get vehicles to do tours. There's a small start-up architect (business) looking for funding, and a convenience store-gas station. There's an advance technologies company that deals with recycling," Barksdale said.
Seven workshops are planned for the Moab area to provide technical assistance to small businesses. The series is co-sponsored by the College of Eastern Utah and the state office of the Small Business Administration.
Businesses can write for more information and application guidelines to: Revolving-Loan Fund, Southeastern Utah Association of Local Governments, P.O. Box 1106, Price, UT 84501.