BANGOR, Maine — A partnership between the U.S. Small Business Administration, Eastern Maine Development Corp. and Bangor Savings Bank has produced $1.3 million in small-business loans in just three months.
The partnership, which was created to streamline and promote loans for Maine’s small businesses, has done just that and more, according to representatives of all three organizations, other partners and one small-business owner in Newport who already has benefited from the not-yet-year-old partnership.
“We were denied a traditional bank loan for an expansion we really needed to do, so we called Tracy Knights [EMDC business and work force development specialist] to see if she could help,” said Monica Dyson, owner of Little Friends Child Care Center in Newport. “She not only said she could, she had a new loan done so quickly, we weren’t quite ready to use it yet.”
Since the partnership became official and operational about five months ago, EMDC has helped provide loans to businesses from Newport to Blue Hill to Presque Isle.
“We didn’t want to run before we were able to walk, but I guess you could say we made up for lost time,” said Michael Aube, EMDC president. “We think this is a very, very important component, that $150,000 to $250,000 loan range. The big loans will still be taken care of by the banks and private lending institutions.”
The Community Advantage Loan initiative was created by the SBA to encourage job creation, economic development and growth. Its key feature is the speed of the approval process with a streamlined, two-page application process for 7(a) loans up to $250,000 and a decision timeline that only takes five to 10 days.
“We began the program in April 2011 and originated because we saw this huge market gap in small dollar loans to small businesses,” said Jeanne Hulit, associate administrator for the SBA’s Office of Capital Access. “Since EMDC became involved, they’ve originated eight of the 11 Community Advantage loans and their success puts them in the top 10 in volume among lenders in Maine.”
EMDC is one of three nonprofit organizations in Maine which the SBA has partnered with for the Community Advantage Loan initiative.
“This fills a niche that the private sector wouldn’t fill and it bridges a gap in small-business loans that wasn’t necessarily filled by public or private agencies,” said Hulit. “And the way the program is set up is ideal because the local organizations like EMDC are the ones in the community who know where the needs are, who the borrowers are, and the area itself.
“And we don’t have the boots on the ground to get to know the subjective factors that can be just as important as the facts and figures in the loan application.”
Bangor Savings was the first financial institution to sign on with the program, primarily because its officers see a pronounced need for it and benefits to being involved.
“It fills a gap. Any business with a multiyear history of being profitable and has assets can obtain conventional financing,” said John Moore, Bangor Savings senior vice president. “It’s the ones that may not have a full three years of financial results or any physical assets for collateral that need a guarantee for the financial lender, and the SBA provides the most accessible, low-cost guarantee for small businesses.”
Moore said the nurturing aspect of the program with the involvement of agencies such as EMDC also makes it more attractive for loan institutions to join.
“Not only do they know the businesses better, they maintain a relationship with these businesses long after the loans are made,” Moore said. “They’ll even help train their employees.”
Aube said he sees EMDC’s role as not just providing loans but also working as a support system and safety net to help businesses expand and succeed.
“It’s also an asset to us,” Aube said. “This fits right into our mission as to job creation and business development and growth. We’re happy with the whole model.”
For information on the Community Advantage 7(a) program, call EMDC at 942-6389 or 800-339-6389 or go to www.emdc.org.