10/15/2009
Even In a Recession, Financing Alternatives Exist
by Herb Lawrence, Center Director, ASU SBTDC
Looking for funding opportunities for your start-up or expanding small business? A number of entrepreneurs and businesses in Independence County have discovered a new source of supplementary funding through the Independence County Economic Development program.
In 2008 Independence County passed a 1/4-cent sales tax increase to help retain or expand jobs and spur business growth. As a supplement to a traditional bank loan or other capital acquisition, applicants can receive a "forgivable loan" based on the number of new employees to be used for their funding needs. So a small company needing $100,000 to start up a new business and intending to hire 10 employees could receive between $1-4,000 per new employee (based on salary/wage to be paid) to offset their overall funding need.
If the business actually hires all 10 workers, the loan is forgiven and is considered a grant. If the business only hires 5 new workers, then one half of the loan is forgiven and the business pays the remaining half back as a subordinated loan from the ICED.
Applicant businesses must provide a viable business plan and proof of ability to receive the additional funding from traditional sources. In 2009 the ICED has approved 4 projects with a pledge to create 185 new jobs in the county. The ASU SBTDC has worked closely with the ICED applicants, providing assistance in market research, business plans and loan packaging.
A number of other counties throughout Arkansas have developed similar economic development programs. If interested in operating in Independence County contact Ed Mabry, executive director of the ICED, at (870) 793-2378. If outside of Independence County, contact your local chamber to see if your county has a similar program.
