Not wanting to be stampeded into spending $160,000 on organizing a Small Business Investment Corp. to provide long-term financing for expanding small businesses, the Utah Economic Development Board probably won't consider the issue until its June 21 meeting.
Meanwhile the board's Special Opportunity Fund Subcommittee has been directed by the board to study the request and make a recommendation at the meeting.At Tuesday's board meeting, Chairman Max A. Farbman said he is certain the board supports the SBIC concept and the board favors helping small business, but believes the subcommittee should study the issue.
Three weeks ago, David W. Adams, Utah Department of Community and Economic Development executive director, and David J. Grant, Utah Division of Economic Development director, received a request for $160,000 that will be used to hire an SBIC manager and a secretary, establish an office and begin looking for companies or people who want to invest in an SBIC.
Adams and Grant told Peter Cooke, chairman of an SBIC Task Force, and R. Kent Moon, Utah Small Business Administration director, the request must be considered by the board.
Last week, the task force completed work on a SBIC creation proposal that has been given to board members, but board members decided more study is needed because it is a complicated issue.
Board member John Price, Salt Lake businessman and developer, said he and fellow board member Bonnie Miller met last week with Cooke and Fred S. Ball, Salt Lake Area Chamber of Commerce president, to discuss the SBIC proposal.
Price said the meeting was very embarrassing because Cooke said he talked to other board members previously and Cooke gave the impression that several of them had approved of granting the money. Price said Cooke became somewhat abusive in the meeting and intimated that the money could be obtained regardless of how Price felt about the proposal.
"I believe the SBIC should be formed in the private sector" with 25 percent of the money provide by private industry and the remainder borrowed from SBA, the agency that must license an SBIC, Price said. He said he doesn't believe the state has the money to start an SBIC.
Last December, Ball appointed a task force to study the feasibility of creating an SBIC, but it became apparent the chamber, because it is a non-profit organization, couldn't have the SBIC as part of its organization because the SBIC will be a profit organization.
However, the chamber's board of governors has passed a resolution favoring creation of an SBIC, and allowed Ball to help in raising money to get the SBIC going.
The task force's proposal was written principally by Moon and notes there is a need in Utah for an SBIC to provide capital to established companies on the verge of growth. Because most bank loans made to companies are for one year or less, there is a gap because the developing companies need long-term loans and an SBIC can provide the money.
The proposal states that if $3 million can be raised by the private sector, the money can be leveraged by SBA money and the SBIC will have $12 million to loan to small businesses.