The people trying to form a Small Business Investment Corporation in Utah to provide money to companies on the verge of expansion are entering the second phase of the plan without any money.

Members of an SBIC Task Force formed by the Salt Lake Area Chamber of Commerce hoped to get $160,000 from the Utah Economic Development Board to hire a manager, open an office and begin soliciting money that would result in an SBIC with $5 million leverage, but that avenue closed quickly when development board members rejected the request.As a result, the task force has evolved into Utahns for Capital Formation, a group that has held one meeting and plans to hold a second meeting in October to discuss ways of raising the money.

Peter S. Cooke, task force chairman, also is chairman of the new group. He said UCF's goal is to establish a fund large enough to aid existing high-growth companies, educate the public and private leaders on how "gap financing" is necessary for economic growth in the state and keep the public aware of the need for capital formation.

Besides Cooke, members of UCF advisory board are Paul F. Barber, Utah Power & Light Co.; Kathy Jones-Price, IDS Financial Services; R. Kent Moon, Utah director for the Small Business Administration; Doug Rhodes, director of small business and economic development for the chamber; Jim Swenson, Ballard Spahr Andrews and Ingersoll law firm; Ed Mayne, AFL-CIO state director; Kem Gardner, Boyer Co.

Also, Gary Mangum, Regency Securities; Bruce Jensen, Fotheringham and Associates; David Irvine, Research Associates; Burt Hunsaker, Utah State Retirement Board; Steve Sorensen, Southmark Properties; Greg Miller, executive vice president, Continental Bank & Trust; and Bill Anderson, Full Service Insurance.

Last year, several people, including Moon and Cooke, made a pitch to the chamber that Utah needed an SBIC to provide money to fast-growing companies that couldn't get long-range financing from the traditional sources. The resultant task force decided there was a need and voted to ask the board for the money.

But, based on a recommendation from its Special Opportunities Fund Subcommittee, the board refused to approve the proposal unless four conditions were met.

Two weeks ago, Cooke wrote to Max Farbman, board chairman, and said the conclusion reached by the subcommittee and board didn't relate to the request the task force submitted.

Cooke said task force members weren't invited to present the proposal to the board.

Rather than wait longer to get the SBIC going, Cooke organized the UCF and presided at the first meeting.

Moon said there is a need for "middle gap financing" in Utah because many high-growth companies won't realize their potential without some financial help. He said banks generally are conservative in their approach to financing and usually loan money on projects that will pay a lower rate of return, but also will have a lower risk.

He said it is unfair to criticize banks for this approach because they must remain sound, meaning that other sources of capital must be found. If a projected decline in the population becomes a reality by the year 2000, Moon said business must turn to high technology equipment and that will take money.