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Tiny loans will benefit small companies seeking short-term aid                                                             it’s unlikely $35,000 will be much help, he said.                       calls have been running to 85 a month.
             BY BETH FITZGERALD                                                                                                  But John P. Cole, senior vice president of                              One business owner asked for $250,000,
                                                                                     Lending
WHEN THE SMALL Business Administration                                                                                     business banking at Wells Fargo/Wachovia,                               though said he’d take $35,000. “But we said no
pitches its $35,000 loan later this month to firms                  expand into other areas of New Jersey.                 said the ARC loans are not too small. “That                             — it doesn’t make sense,” McHenry said. “If
seeking “temporary financial relief to keep their                         “The economy is picking up — the phone           dollar amount works for our small-business                              you need $250,000, then $35,000 won’t turn
doors open,” it may be the salvation of small                       is ringing more and people have a little more          clients. They are needed, absolutely.”                                  things around. And are you just delaying the
companies seeking short-term survival cash.                         discretionary income,” she said.                             New Jersey has four microlenders who                              inevitable by taking these dollars?”
      But experts said $35,000 isn’t much                                 ARC loans can be used to make the pay-           borrow money directly from SBA and then                                       CPA Jay Trien, of Trien Rosenberg in
money, especially in a high-cost place like New                     ments on an existing loan for up to six months,        make loans of up to $35,000 to small business-                          Morristown, said ARC “will be good for the
Jersey, and these loans are likely to be limited                    but the money can’t be used to make pay-               es and startups; microlenders also can make                             small business that has one or two employees
to companies that might survive the recession.                      ments on another SBA loan taken out before             larger loans in partnerships with banks.                                and will be able to stay alive for a better day.
      “It sounds like a good program,” said                         Feb. 17, when President Barack Obama signed                  Ellen McHenry, director of finance for                            But what happens to the business that has six
Stephen Guidette, senior vice president of                          the American Recovery and Reinvestment Act.            microlender Union County Economic Develop-                              or 12 employees and needs hundreds of thou-
business banking for Jersey City-based Provi-                             “This will provide help and assistance to        ment Corp., said small businesses are coming to                         sands of dollars?”
dent Bank. He said these small loans seem                           small businesses that are viable, but have             her agency for larger loans. “We are getting calls                            Businesses can’t get credit “because the
geared to “the small mom-and-pop or profes-                         encountered difficulties in the current economy        from people asking for a lot of money,” more                            banks are running scared,” he said. “They might
sional-services businesses. It’s another brick in                   in meeting existing debt payments,” Kocsi said.        than $100,000, she said. UCEDC usually gets                             have approved the loan a few years ago, and now
the wall to build back the economy.”                                      And if a business has a large loan in arrears,   about 30 inquiries a month, but since January,                          they are moving very slowly and carefully — and
      The $787 billion federal stimulus Congress                                                                                                                                                   while they are waiting, businesses are suffering.”
                                                     Steven J. Dundas




enacted in February includes $255 million for                                                                                                                                                            Mike Diemer is executive director of the
this loan program, dubbed America’s Recovery                                                                                                                                                       Cooperative Business Assistance Corp. in Cam-
Capital. While most SBA loans now carry a 90                                                                                                                                                       den, which makes microloans as well as larger
percent federal repayment guarantee, ARC loans                                                                                                                                                     loans, typically $100,000 or more, in participation
will be 100 percent guaranteed — and the bor-                                                                                                                                                      with banks. “We’re getting a lot more applica-
rower makes no payment for the first 12 months.                                                                                                                                                    tions, and we’re doing more deals,” Diemer said.
      Jim Kocsi, SBA district director for New                                                                                                                                                           One business that recently got financing
Jersey, said small-business owners who think                                                                                                                                                       through CBAC is Swisco Inc., a Camden storm
they might qualify for ARC should start talking                                                                                                                                                    window and door manufacturer. Anita Pallas,
with a lender now, as SBA will roll out the pro-                                                                                                                                                   office manager, said Swisco secured financing
gram this month. There’s enough money for                                                                                                                                 
								
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