Infusion Of Money For Small Business Loans In Michigan

Help is on the way for small businesses in Michigan.  WWJ's Beth Fisher reports Governor Rick Snyder made the announcement at United Metal Products in Detroit today.

"The problem in Michigan we're facing is that credit-worthy companies are unable to get loans because banks have tightened up lending," Snyder said.  "This means small businesses that want to expand and hire can't get access to needed capital. Using the federal funds to ensure against default will give banks more confidence and make them more likely to lend, which will spark job growth."

Michigan small businesses seeking to grow will be more likely to qualify for loans even in the face of an ongoing credit crunch thanks to an infusion of cash from the federal government that will bolster the state's small business lending program, Governor Rick Snyder and the Michigan Economic Development Corporation announced today.

The federal funds are being made available through the State Small Business Credit Initiative (SSBCI), part of the Small Business Jobs Act signed into law last October. 

Snyder made the announcement with U.S. Treasurer Rosa Rios at United Metal Products, a company that has benefited from the MEDC's supplier diversification fund program, predecessor of the Michigan Business Growth Fund on which the federal law is partly modeled.  

Michigan is the first state that will receive federal funds through the program, and will receive approximately $79.1 million to back small business loans.

The goal of the federal program is to help small businesses obtain loans of at least $10 for every $1 dollar the state provides in support, meaning the $80 million of federal funds will generate approximately $800 million of loans for small businesses that otherwise may not be able to get them.

"This is a big boost," Snyder said.

Previously, the MEDC's efforts have sparked loans of more than $191 million for small businesses on a public commitment of $20 million, which is expected to be recycled into the program with interest as loans are repaid. 

To date, the program has had no defaults and has generated an estimated 4-percent annual return for Michigan taxpayers.

Snyder, who served as the first chairman of the MEDC, thanked the organization for its effort.

"It's time to get the MEDC back to the basics of economic development so we can get people back to work," Snyder said.

The MEDC will use the federal funds to operate the Michigan Business Growth Fund and the Capital Access Program.

"Everywhere I go in Michigan, I hear from small business owners who are trying to get loans to expand their business and hire new workers," said U.S. Senator Debbie Stabenow.  "This initiative will create partnerships between the federal and state governments to support existing efforts to help our small businesses."

Associated Press Contributed to this report.