Updated April 28 at 12:28pm

EDC fund struggles to find takers

By Patrick Anderson
PBN Staff Writer

When Rhode Island secured a $13.1 million grant from the U.S. Treasury to lend to small businesses in 2011, finding Ocean State companies to take the money didn’t register as a concern. More

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ECONOMIC DEVELOPMENT

EDC fund struggles to find takers

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When Rhode Island secured a $13.1 million grant from the U.S. Treasury to lend to small businesses in 2011, finding Ocean State companies to take the money didn’t register as a concern.

It’s become one at the Small Business Loan Fund, the arm of the R.I. Economic Development Corporation managing the funds and still experiencing a hangover from negative public perceptions of the 38 Studios LLC loan-guarantee debacle.

One of three organizations to receive a piece of the grant, the SBLF has struggled to find takers for its $2 million loan pool thanks to dwindling applications in the 10 months since 38 Studios collapsed.

With wholesale leadership changes in state economic development and a lawsuit against those involved in 38 Studios, many businesses apparently wrote the SBLF off.

“We went over four months without a transaction, starting last summer and going into the fall,” said Sean Esten, director of financial programs at the EDC. “We have been going to community forums and telling people we are open for business as usual. But it was tough to get the message out.”

In addition to the cost in opportunity of not utilizing its capital, the SBLF slowdown threatened to hold back the 2011 federal grant money due to the other two recipients, public venture capital Slater Technology Fund and the Betaspring startup accelerator.

Slater is the largest recipient of the grant, awarded through the Treasury’s State Small Business Credit Initiative, due $9 million out of the $13.1 million, with Betaspring due $2 million and SBLF the remainder.

To avoid holding Slater and Betaspring back, the SBLF has advanced them $1 million of $1.5 million it had planned to lend itself, against their total awards.

The federal grant was divided into three installments and to receive each, the state has to have used 80 percent of the previous one.

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erik@tjrussellcompany.com

The EDC is a joke. These state employees have no clue what it's like to be in the real world economy of RI. They sit in their ivory tower and "don't want to compete with the banks". They say they want to help grow RI businesses, but their credit terms are an insult. Five year amortizationa and 7.5% interest rates and you have to be turned down by a bank and pay $250 app fee for the privilege of applying for one of their stinking deals only to be turned down because the repayment is so onnerous that it wreaks havoc with your cashflow. I've just about had it with this stupid state, I'm serously considering moving my business to Seekonk or Swansea. Very Truly Yours, ERik C. Warner, President/Owner TJ Russell Supply, Bristol, RI employer of sever souls.

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