Cabinet for Economic Development
U.S. Treasury Department Awards 3rd Round of Funding to Kentucky Small-Business Lending Program
Banks, credit institutions encouraged to apply for ‘gap’ funding for business loans
FRANKFORT, Ky. (Oct. 20, 2015) – Governor Steve Beshear announced today Kentucky received nearly $5.3 million from the U.S. Treasury Department to help small businesses receive private-sector loans from banks and other credit institutions.
“This loan funding gives Kentucky small businesses the extra backing they need to expand and create jobs. We designed a streamlined and easy-to-access program for banks and credit institutions to apply for these funds on behalf of businesses seeking loans,” Gov. Beshear said. “Through our program, we are helping more than 100 small businesses access almost $87 million in loans, $77 million of which are private-sector. That success led directly to this latest round of funding.”
The funding marks the third disbursement from the U.S. Treasury Department’s State Small Business Credit Initiative (SSBCI) since 2011 to the Kentucky Small Business Credit Initiative (KSBCI).
Banks and qualified lenders apply to KSBCI when a business of fewer than 500 employees applies for a loan and falls just short of the institution’s requirements. To fill that gap, eligible companies can receive loans of up to $20 million from lenders with 20 percent provided by the state. Loans exceeding $250,000 are subject to Kentucky Economic Development Finance Authority (KEDFA) approval. Kentucky’s program targets underserved regions to encourage business growth and hiring.
The SSBCI’s disbursement brings the Commonwealth’s total allocation to nearly $15.5 million since July 2011. Kentucky unlocked its third disbursement after expending 100 percent of its first disbursement and 80 percent of the second round. To date, KSBCI helped Kentucky companies receive $86.8 million in loans.
Maynard Studios, a professional blacksmith enterprise in Lawrenceburg, specializing in architectural ironwork railings and furniture, received approval for a $165,750 loan from Community Trust Bank in Versailles in 2012.
“When we initially sat down to run the numbers, we could not get a loan to build a new studio. Without the new studio, we couldn’t have grown at all,” said Karine Maynard, who founded the business with her husband, Matthew.
The loan included nearly $25,000 from KSBCI. It helped grow the couple’s newly incorporated business to its current five employees. Maynard’s new studio opened in January 2013 and since expanded to include an office, breakroom and additional production area. The space allows for more equipment, employees and physically larger projects, which doubled the company’s revenue in both 2013 and 2014.
“Without the program’s assistance, we’d still be doing what we do, but we couldn’t take on the kinds of commissions we do,” she said. “Since expanding, we’ve received international recognition and are working on commissions for installation in buildings from San Francisco to New York City.”
Eastern Telephone & Technologies, in Pikeville, used its $275,000 loan – which included $9,500 in KSBCI backing – to retrain employees and modernize its sales-and-installation business. The 20-employee company shifted from primarily landline and electrical systems to cutting-edge, networked Internet-of-Things systems.
Customers for its building-access, HVAC control, security and landline-to-mobile telephone systems include retail and commercial businesses throughout eastern and central Kentucky.
“The loan allowed us to stay current and relevant in the new technology world,” said company founder Darrell Maynard, no relation to Matthew and Karine Maynard. The company paid off its loan in January 2014, allowing KSBCI to recycle the funds for future loans.
The Small Business Jobs Act, signed into law by President Barack Obama in 2010, established the SSBCI program. The Treasury Department has disbursed more than $1.2 billion in SSBCI funds to participating states, municipalities and territories since the program began. Nationally, from 2011 to 2014, SSBCI funds spurred more than $6.4 billion in private sector lending and investments to small businesses. States have generated $7.36 in private sector lending and investments for every $1 of federal support. Business owners reported these funds will help them retain or create more than 140,000 jobs.
Kentucky’s SSBCI funding is administered by the Cabinet for Economic Development’s Office of Entrepreneurship. The innovative financing option works in partnership with participating lenders. Lenders can use three Kentucky-specific credit enhancement options to strengthen loan requests that are credit-worthy in nature but fall just outside acceptable underwriting standards. The credit initiative bridges the gap, making it possible for lenders to finance more small businesses.
“The first two disbursements of SSBCI funds allowed us to support more than 115 loans to over 100 small businesses throughout the state,” said Cabinet for Economic Development Secretary Larry Hayes. “We will continue that momentum by engaging financial services partners to put this funding to work in Kentucky.”
Kentucky businesses and lenders may obtain more information about the KSBCI at www.thinkkentucky.com/smallbizlending
For more information on SSBCI and Treasury’s other small business programs, please visit www.treasury.gov/smallbusiness.
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