Idaho has a program that can help small businesses get money. The only problem is that too few people know about it.
Real estate and financial professionals who work with business owners need to educate their customers about the program, said Nancy Lemas, president of Commercial Northwest Property Management in Boise.
For that to happen, real estate agents, brokers, accountants and lenders first need to learn about the program so they can pass on what they know, Lemas said.
The collateral support program, which the Idaho Housing and Finance Association administers within the state, works by establishing cash deposits that count as collateral for business loans from banks and other lending institutions. The money doesn’t belong to the companies that borrow it, but it remains on their balance sheets as long as the loans are active.
The result is more collateral and a loan-to-value ratio lenders find more appealing. That enables some companies to secure a loan they otherwise couldn’t.
“Collateral is always king for a lot of places,” said Mark Stephenson, a Small Business Administration loan officer for Mountain West Bank in Meridian. “It makes deals a lot more viable.”
For businesses that are already up and running, the collateral support program helps refinance older, more expensive loans, Lemas said. By refinancing those old loans at today’s low rates, businesses can save thousands of dollars each year, positioning them to invest or simply shore up cash reserves, she said.
“I have clients right now that it could be of use, including myself,” Lemas said.
Idaho will receive a total of $13 million for the collateral program, according to the Housing and Finance Association. The group’s goal is to use that money to generate some $131 million in total lending.
So far, the association has approved 83 applications for $5 million of collateral support deposits, spokesman Jason Lantz said. The deposits have generated more than $32 million in private loans, he said.
While Lemas would like to see more businesses using the program, Cory Phelps, the association’s economic development finance officer, is encouraged by what he called “good participation.”
“We’re definitely seeing an increase in applications,” he said. “In fact, Idaho is one of 11 programs around the nation that has expended or obligated more than 30 percent of its total allocation.”
When businesses pay off their loans, any collateral support deposits they received cycle back into the program to encourage further loans, Lantz said.
If a business defaults on a loan propped up by the collateral program, the lender can take the deposit after liquidating the business’s assets. So far there have been no such losses in Idaho, Lantz said.
Sven Berg: 377-6275
