From: Porter, Paulette (GOV)
Sent: Tuesday, October 05, 2010 5:03 PM
Subject: What the Governor's Talking about Today

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:

 

 

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