By Brian Brus
Courtesy of The Journal Record
OKLAHOMA CITY – A partnership of Oklahoma City public agencies revealed plans to develop a $2 million small business revolving loan program Monday.
“We’ve been looking for ways to help small businesses, and our strategic investment program has been geared toward bigger companies,” said Cathy O’Connor, chief executive of the Alliance for Economic Development of Oklahoma City. “I think there’s a missing part of that program to help small businesses.”
The Grow OKC program, which will be submitted to the Economic Development Trust for approval Tuesday, is the joint effort of City Hall, the Alliance, the Greater Oklahoma City Chamber and the nonprofit i2E Inc., said Rex Smitherman, senior vice president of operations at i2E.
“It allows us to commit some federal funds that we manage here, to leverage local city funds to provide growth capital for existing small businesses,” Smitherman said of i2E’s contribution of $1 million from a Specialized Small Business Investment Company grant. “I can’t stress enough that this is not a competition with banks – we see this as an enhancement of what banks try to do.”
Under the proposal, the Alliance will provide $1 million in matching city funds from a GOLT (general obligation limited tax) bond fund, O’Connor said. She was unable to predict how many businesses could be supported in the first year of the program.
Applicants will face a rigorous evaluation to assess their viability, Smitherman said. And if a company is approved, i2E will hold an equity stake, further ensuring transparency in how loan recipients are chosen as safe investments.
O’Connor and other city officials said the loan program will also help address a recurring complaint from small business operators who are bothered every time a big business gets economic incentives to relocate or expand.
“The city’s funds will be fully collateralized as a fully repayable loan,” Smitherman said. “While i2E’s funds face a certain amount of risk, the city’s funds are fully covered. And if anything goes wrong, bank loans get the first shot. … Nothing is being given away.
“What we’re doing is marrying our funds with the city’s ability to do lower-interest loans,” he said. “We understand that in small business, this has been a gap in need for capital. This is part of the answer to that.”
If the program is approved by the trust, it then will be submitted for City Council consideration.