"If the Utah Economic Development Board doesn't approve a $160,000 grant for creation of a Small Business Investment Corp. it will be a tremendous step backward in the attempt to help the Utah economy."

So said Peter Cooke, chairman of the SBIC Task Force, a group organized by the Salt Lake area Chamber of Commerce to look into creation of an SBIC that will loan money to businesses on the verge of expansion that are having trouble getting money from banks.The board will consider the grant request Tuesday at 8 a.m. in the State Office Building. Making a presentation will be Cooke and R. Kent Moon, Utah director of the Small Business Administration, which will license the SBIC if one is created.

Several days ago, Moon, Cooke and others approached David J. Grant, Utah Division of Economic Development director, who said the purse strings of the division lie with the board. Since then, several board members have been contacted about the proposal.

Formation of an SBIC was suggested several months ago to the chamber and the Board of Governors appointed a task force to see if it was feasible. It became apparent the chamber couldn't get directly involved with an SBIC because the chamber is a non-profit organization.

That doesn't preclude chamber officials from helping raise money for an SBIC. After receiving a report on formation of an SBIC, the Board of Governors passed a resolution approving of the formation.

Moon said because banks traditionally are a little conservative and don't want to make long-term loans, it creates a gap in financing for businesses that are on the verge of growth, but need money to move forward. An SBIC fills the gap, Moon said.

A proposal discussed at the task force's Thursday meeting shows that in the last five years, 73 loans were made to Utah companies by SBICs outside of the Utah because Utah doesn't have an SBIC. If you team up an SBIC having a substantial amount of money (at least $10 million) with some growth-potential companies "you will see some real successes," Moon said.

The proposal, scheduled to be submitted to the board Tuesday, said that since SBICs began operating nationally 29 years ago, they have provided $6.53 billion of financing for 50,483 small businesses. SBICs currently have $1.765 billion of financing outstanding to small businesses.

The $160,000 will be used to hire a manager for a $75,000 annual salary, a secretary with a $20,000 annual salary, pay legal fees and establish an office. The manager will be responsible for finding investors.

Cooke said he has talked to Ed Mayne, president of the Utah AFL-CIO, about using union pension funds to invest in an SBIC. He also has talked to officials of the utilities and the State Retirement Fund about possible investment.

The proposal to the board notes that money raised by the SBIC can be leveraged on reasonable terms through the SBA at a rate of 3:1 debt equity, meaning $4 million can be turned into $12 million. Moon and Cooke believe an SBIC with $12 million will be asset to the state.