What the Governor’s Talking about
Today
Tuesday, October 5,
2010
Governor, Business
Leaders Underscore Small Business Financing to Grow Economy, Create New
Jobs
The governor today in Lansing joined representatives of small
businesses and lending institutions to discuss access to capital issues facing
small businesses and to highlight the new State Small Business Credit
Initiative, a component of the Small Business Jobs Act signed last week by
President Obama. The initiative was modeled after the state’s Michigan
Supplier Diversification Fund (MSDF) that uses state resources to leverage
private loans for manufacturers seeking to diversify into new sectors, including
clean energy.
Later in the day, the governor together with banking and
Michigan Economic Development Corporation (MEDC) officials visited a Westland company that has
benefited from the MSDF. American Gear & Engineering provides gears
and specialty products for firms all over the country. With the assistance
of the MSDF, the 25-year-old company is expanding into wind energy
manufacturing.
The State Small Business Credit Initiative will provide
approximately $78 million for Michigan’s loan enhancement programs,
including the MSDF and the Capital Access Program. Operated by the MEDC,
these programs help Michigan businesses access credit by
leveraging private sector capital.
Many Michigan companies such as auto suppliers have
been unable to access capital because the value of their property and equipment
has diminished, preventing them from meeting standard collateral
requirements. The State Small Business Credit Initiative makes up this
collateral shortfall by depositing funds with the lending institution of up to
49.9 percent of the loan. The state owns and earns interest on the
deposited funds, and the lender is protected in the case of a loan default
through a lien on the funds.
Key messages:
- Small businesses
are vital sources of innovation and job creation. Federal funding
through the State Small Business Credit Initiative will provide a six-fold
increase in Michigan’s ability to aid our small
businesses.
- The State Small
Business Credit Initiative builds on Michigan’s leadership in helping
entrepreneurs by ensuring greater access to capital to support small business
growth and new jobs.
- To date, the MSDF
has supported 25 loans with a state investment of approximately $13
million. This state investment has leveraged $100 million in private
loans to Michigan companies.
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