In an attempt to fertilize fallow ground, the state has been encouraging business growth with a state-funded, "economic gardening" loan program that is billed as a job creation engine. But its too soon to tell how successful the Gov. Charlie Crist-backed program may cultivate or whether it will survive.
Twenty-five businesses, at last count, have been approved for the states fledgling Economic Gardening Business Loan Program that can lend applicants as much as $250,000. The loan program and GrowFl, a technology training and business strategy program that supports the loans, has been promised a total of $10 million. But with the loan program still working through the money, additional future funding has yet to be decided.
The loan program was not included in the state budget that takes effect Thursday, but GrowFl, could receive as much as $2 million in the state spending plan.
The economic gardening program grants small loans of no less than $50,000 and no more than $250,000 to businesses that generate no less than $1 million in annual revenue and no more than $25 million in annual revenue.
The loans, administered by the Orlando-based Black Business Investment Fund, come with 2 percent interest to be paid over four years and a requirement that one full-time staff member be hired for every $50,000 borrowed.
For Duane Lewis, vice president and senior loan officer for the Black Business Investment Fund, the success of the program isnt in question.
Its been very successful, he said. Weve exceeded what weve appropriated upfront.
The Investment Fund has received and sped through half of the $8.5 million that was given to the loan account by the state last year, and it is waiting on the Office of Tourism, Trade and Economic Development to release the rest of the money, which it is expected to do soon.
The program has approved $4.89 million in funds, more than it has money in hand for right now, for the 25 businesses approved for the program statewide, Lewis said. The program has started a waiting list for the loans as it has continued to approve applications. Businesses that have closed on the loans have generated 48 jobs so far but the investment fund is expecting twice as much from its approved participants, Lewis said.
The loans can be used for employee staffing and training to capital investment, and Lewis said it has been used all over the state, but most heavily in Central and South Florida. The loans, reserved for business with no less than 10 and no more than 50 employees have benefited not only small businesses, but those run by women and minorities.
Sarasota businessman Hidayet Kutat has used one of the economic gardening loans to compensate for a downturn in the construction industry that is vital to his business.
The owner of Gulf Coast Signs of Sarasota has used a $250,000 economic gardening loan to try and expand from manufacturing and installing signs used by the construction and real estate industry to producing Americans with Disabilities Act signs and using wide-format digital printing to create banners and the like.
Basically, our goal is to divorce ourselves from the construction industry, Kutat said.
Gulf Coast Signs hadnt hired anyone since 2008, Kutat said over the phone. But after getting the loan, it employed a marketing person and is on the way to hiring a second as it pursues the plan to expand the business.
If I didnt have this new money, I would have no reason to hire trhis new marketing person, Kutat said.
It is investing in equipment and looking at overseas opportunities, Kutat said.
The economic gardening loan program, modeled after a similar loan program in Colorado was proposed by Crist in January 2009, when he was still calling himself a Republican, as the states economic stimulus. However, it wasnt funded until October of that year, and its still getting its feet off the ground.
Lawmakers will review the program as depletes its funding to see if it is worth continuing.
GrowFl, the technical assistance and business strategy program available for loan recipients and others who meet its requirements, already has $1.5 million allocated to it from last year.
It has been promised at least $1 million in the state budget that takes effect Thursday, but it could receive another $1 million depending on how much money the state receives from the Federal Medical Assistance Percentages program.
Ellyn Bogdanoff, a Republican state House representative from Fort Lauderdale and chairwoman of the House Tax and Finance Committee., said shes cautiously optimistic about the program. The months it took to get the fund off the ground made her nervous, but she said the loan program was the right way to approach job growth: by allowing the private sector to take control of it.
This is the only way to do it, she said.
Reach Alex Tiegen at (561) 329-5389 or atiegen@gmmail.,com
