For our readers who don’t know, what is the Connecticut Community Investment Corp. (CTCIC) and who do you lend to?
CTCIC is an economic development lender. We offer financing, primarily through Small Business Administration (SBA) programs, that promote specific economic development goals. For example, our CTCIC 504 loan program incentivizes small businesses to expand and create jobs by providing 90 percent financing for real estate or equipment purchases. Our Microloan and Childcare Microloan programs provide access to capital for promising start-up and existing businesses that don’t yet qualify for traditional bank financing for a variety of reasons. In addition on-going technical assistance is available to those borrowers for the life of the loan.
Where do you get your capital from and how much are you lending right now considering the times? Are you having a hard time raising capital?
Our capital comes from a variety of sources. CTCIC 504 loans are funded through the sale of securities backed by the SBA. By all practical measures, that means we have access to more “504 loan dollars” than we could possibly lend. To fund our Microloan Programs we borrow money from the SBA. We have additional loan funds available from the SBA should we need additional Microloan capital. That said, we are actively lending now and have plenty of funds to continue lending into the foreseeable future.
Are small businesses reluctant to borrow right now?
Yes. You can’t expect small business owners to react any differently to the current economic crisis than consumers. That means most small businesses are reevaluating their borrowing needs and postponing capital expenditures if possible. But there are still a number of small businesses that need to fund growth as well as entrepreneurial business owners who are finding new opportunities in a down economy. They continue to borrow.
Will the proposed stimulus package include any provisions that could aid CTCIC and its borrowers?
The Senate version of the bill contains a few enhancements to the 504 Loan program, most notably allowing for refinancing under certain limited situations. The bill also increases 504 Loan maximums and temporarily eliminates fees. The Microloan Program also gets a boost through a small allocation of funds for lending and technical assistance. Unfortunately the House version of the bill does not address SBA programs. We are hopeful that the final version of the stimulus bill coming out of conference will contain those Senate provisions.
