Bredesen touts loans for rural job growth
Friday September 14, 2007
State raises third of $10 million target
RANDY McCLAIN
Business Editor
from: the Tennessean
Gov. Phil Bredesen's rural loan program, part of a push to spur job growth in rural counties, could start awarding loans up to $125,000 to small businesses within two months, the governor said Thursday.
Bredesen, appearing at a luncheon on the closing day of a state economic development conference at the Nashville Convention Center, said about $3.2 million in private investment funds have been raised so far out of a goal of $10 million.
The money is coming from community banks that put up loan commitments in return for a 10 percent credit on their franchise and excise taxes, plus a 3 percent annual return on funds lent.
"Community banks are the ones participating," said Hank Helton, vice president with Southeast Community Capital, the group that manages the program in partnership with the state and The Tennessee Bankers Association.
The state has appropriated $1.25 million as part of the effort. Its commitment could expand, based on results.
"Loans will be $75,000 to $100,000 for the most part, and will focus on small businesses, companies with two or three employees that need money to expand," Bredesen said after a speech at the 54th Annual Governor's Conference on Economic and Community Development.
Most loans will be paid back over no more than four years, allowing the money to revolve among more borrowers.
Rural areas left behind
Bredesen said Tennessee's economy is growing, but that too many rural counties are in danger of being left behind.
"The reality is there's a lot of people in our state who don't live near one of our major cities or near one of our major suburban areas, and these are the kinds of people we need to ensure have the opportunity for good-paying jobs."
There are "large stretches of our state that simply can't be left behind or ignored when it comes to economic development," Bredesen said in prepared remarks.
Helton said loan commitments from community banks are coming in daily, and typically range from $150,000 to $500,000.
Typical potential borrowers are small companies with 18- to 24-month track records, he said, although some startups in which the owner has extensive experience in a particular industry or substantial collateral also could get a look.
Bredesen said the loan program is just one part of his overall push to create more jobs outside of major cities.
Other elements in play include the Rural Opportunity Initiative, ROI, which gives businesses in economically distressed counties a $4,500 credit against other state taxes for each job created.
There are three levels of distress in the state program, and tax credits are most generous in Tier 3, which covers almost half of the state.
Only 7 counties healthy
Only seven of 95 counties are considered not to be economically distressed. The healthy counties are: Davidson, Williamson, Wilson, Montgomery, Knox, Hamilton and Shelby, according to a state report.
Bredesen also touted an upcoming trip to China in which 100 or more state officials and private business leaders will meet government and business leaders overseas.
"We hope to be able to open some doors and sell some products there," the governor said.
