Pasco Set To Make Microloans Available to Small Business

When county commissioners agreed to kick $100,000 into a pool of money available for small business loans, they joined some surrounding counties in adding another service for small companies.

Commissioners called the loan program another tool to aid businesses and increase employment.

Hillsborough and Citrus counties also have what are called microloan programs aimed at helping small companies that have trouble securing money from more traditional sources.

The federal microloan program started in 1992, is run through the Small Business Administration.

On Tuesday, Pasco County commissioners gave preliminary approval to a request from the Pasco County Economic Development Council to provide $100,000 of economic development money for the microloan program.

The commission’s agreement is a step in securing local support for the program that is necessary if the county development council is to become a Small Business Administration intermediary lender.

That would open the gates for more potential money for business loans.

The effort has also gained support from individuals and businesses in the county, said Michael Cox, who is heading the development council’s work in the program.

The 13,000 small businesses in the county employ 60 percent of the workforce, said Cox, a former county commissioner.

The council’s goal is to have $250,000 available for small businesses, with the potential for more in federal money.

Once the council meets federal requirements, the county will be eligible for more economic development money. When the program has a year’s experience in lending and gets SBA approval, the council can apply for up to $750,000 in federal money for microloans.

In the future, the county may be able to go after a total of $3.5 million in federal money.

The county also will have counseling and training available for business owners, and some applicants may be required to take the counseling and training as part of the loan.

Hillsborough and Citrus counties run their microloan program through their development arms, though Hillsborough limits the mini-loan to $25,000. Citrus recently expanded its program to $10,000.

In Pasco, the limit will be $35,000.

Cox said banks and other traditional loan sources may be reluctant to lend money for some business ventures, companies needing new equipment to seek more customers or businesses with portable machinery that can disappear overnight.

Businesses can use the money for working capital, inventory, supplies, furniture, fixtures, machinery and equipment. The loans cannot be uses for real estate or to pay existing debt.

The companies have to meet Small Business Administration guidelines to apply.

The fixed-rate loans run for a maximum of six years with the interest rate pegged to the 5 Year Treasury Bill rate as a partial basis for establishing the loan cost.

Loans up to $10,000 will carry a maximum rate of 8.5 percent over the loan cost and large loans will have a maximum interest of 7.5 percent above the cost.

Commission Chairwoman Ann Hildebrand said the program adds to other steps the county has taken to entice commerce such as reducing transportation fees.

The money will come from a pool of $500,000 the county set aside to help businesses. It will not diminish $2 million Pasco has available to help large companies.