WORCESTER BUSINESS JOURNAL – Corporate giants such as GE Healthcare Life Sciences and Boston Scientific have lifted Marlborough’s profile as a prime destination for businesses by making the city their home in the last couple of years. But local economic development leaders don’t want to leave the small players in the dust.
That’s why Timothy Cummings, executive director of the Marlborough Economic Development Corp. (MEDC), the city’s development arm, is hoping that a proposal to establish a revolving loan fund for small “mom-and-pop type businesses,” will pass muster before the City Council’s Finance Committee later this month.
The fund would provide gap financing to help small businesses finance expansions and launch new ventures, according to Cummings, literally filling in the gap between loans companies are able to obtain independently and the total cash they need to execute their plans.
“There’s been a lot of hype for the major employers. We don’t want to ignore the little guys,” Cummings said.
MEDC seeks $100K from city
To get started, the loan fund will require a $100,000 appropriation from the City Council. Cummings said he expects the panel’s Finance Committee to review the request at a meeting later this month. After floating the idea to city leaders over the last six months, Cummings believes the proposal has a good shot at success.
Other communities, such as Gloucester and New Bedford, have used revolving loan funds as a way to energize their small-business communities, according to Cummings. He said it’s “among the best ways to use scarce resources” to promote job creation and business development.
If approved by the Finance Committee, small-business owners in Marlborough would be able to apply for loans through the fund. The MEDC would review applications and monitor those that are approved to ensure money is being used for its intended purpose.
Local lenders chip in
Four local lenders, including Marlborough Savings Bank, Digital Federal Credit Union, St. Mary’s Credit Union and Avidia Bank, have each pledged $50,000 in matching funds for the program. If the $100,000 appropriation is approved by the city, half of it would be put into the loan fund initially, bringing the initial pot of funding to $250,000. In the future, the MEDC would like to expand the fund by leveraging the rest of the appropriation with additional matches from lenders, said Lora Markova, spokeswoman for the MEDC.
Cummings was careful to point out that companies will be required to pay back their loans just as they would if they were borrowing the money independently, but the revolving loan fund makes borrowing easier for small businesses, which often have limited access to capital because lenders sometimes view them as high risk.
Chris Berglund, executive vice president at Marlborough Savings Bank, said lending to small businesses became increasingly difficult after the financial meltdown of 2008, as there is now “intense scrutiny” from federal regulators on lending practices. He said the proposed revolving loan fund will be an opportunity to make loans to small businesses more “bankable.”
This article by Emily Micucci originally appeared here.