Schakowsky: Feds, State Could ID Funding Sources For Business Loans

With many banks keeping a tight rein on business loans, could federal and state agencies who deal with more flexible lenders be a better clearinghouse of information to match available money with cash-hungry companies?

“I think you’re right… I’ll investigate that,” U.S. Rep. Jan Schakowsky said in response to the query from Patch. Schakowsky had just concluded the “Rebuilding the Engine of Prosperity” business seminar she staged and moderated Tuesday at the , bringing federal and state officials in contact with some 100 small-business owners and would-be entrepreneurs.

The assembled government representatives explained how to apply for available loan/grant money and navigate their agencies in search of contracts, then networked after the 2 ½-hour program with many of the attendees.

Earlier:

“What I do know is smaller community banks that have experience and a history of lending in the community to small businesses…actually have been (more) accessible than larger institutions who have been holding their money. I’d encourage those who are not doing the lending to do more so they could get on the list (of positive lenders). I think it’s a great idea.”

The concept of accurate information in identifying willing lenders was seconded by Chuck Doyle of the Small Business Administration. He told of veterans’ thwarted searches for “Patriot Loans” earmarked for them, adding the SBA should be contacted first for a list of participating lenders.

“Otherwise you’ll be disappointed,” Doyle said.

Who's been denied a loan?

Schakowsky’s staff already works with institutions on troubled mortgages and foreclosures. But during the program, she repeatedly spoke of small businesses’ No. 1 problem – access to capital. She asked those who had been denied loans to raise their hands.

“You saw most of the hands go up – that’s the big problem for small businesses,” Schakowsky said. “Even those who have been in business for a long time and have a good track record, now there’s this clampdown and the lenders have been pretty stingy in putting money out in the community.

“We’re thinking if these businesses have contracts with the federal government that guarantees them the business, a pretty reliable source, and hopefully that will encourage the banks to match that, to do more lending, that they’ll be able to leverage what they get from the federal government with the lending institutions.”

Schakowsky corralled representatives from the Departments of Defense, Energy and Treasury, and the Small Business Administration. The most sought-after official afterward was Andrew Moyer, chief of staff of the director of the Illinois Department of Commerce and Economic Opportunity. He explained the State Small Business Credit Initiative, which is receiving $78 million for business development from the federal government.

$50 million earmarked for businesses in two years

“We must get $50 million out in the market in two years,” Moyer said.  The money is distributed via a combination of lending and funding that comprise up to 25 percent of start-up money to bridge the gap if a seed investor does not cover the entire cost. Moyer can be reached at Andrew.Moyer@Illinois.gov.

“There are ways you heard about today to give incentives to lenders to be able to put more money out,” Schakowsky said. “For one thing, there’s direct capital investment coming to Illinois -- $78 million that’s intended to go out to small businesses, to encourage the banks to get involved in those programs.”

Larry Thompson of the Department of Energy said his agency, second in size in the federal government after the Defense Department, encourages contracts to small business.

“Every day we’re looking for small competitive contractors to satisfy our needs,”  he said, while adding an important benefit. “We pay small businesses in 15 days – it helps with cash flow.”

Request for help with startup, health care

One issue that also bore further investigation by the assembled officials was raised by entrepreneur Alexander Facklis of Chicago.  In the question-and-answer session, he asked why Illinois does not permit an individual to draw unemployment compensation while starting a small business, before any income is derived. Facklis also was concerned about high health-care premiums for self-employed small-business owners.

In addition trying to solve the constipated lending process, Schakowsky also said President Obama’s original $787 billion stimulus in 2009, while preventing further economic deterioration and either saving or creating between 1.3 and 3 million jobs, may not have been quite enough to really jump-start the economy.

“We’re still in the hole, because we were just bleeding jobs at the beginning, about 8 million jobs in all,” she said. “If the stimulus program, if it had any fault at all, was that it was too small. We actually needed more. The fact of the matter is, it is just false that it didn’t create any jobs at all. Some of the same critics, my colleagues in Congress, are the first ones to go to the ribbon-cutting ceremonies when these projects are actually unveiled.”

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