State Loan Package Broadens Its Focus
It’s been about six months since Connecticut issued its first loan under the Small Business Express program. The aid package has proved wildly popular with business owners in the state, but as WNPR’s Harriet Jones reports, it’s raised some questions along the way.
What do a printing firm, a financial services company, a hardware store and a biomedical device maker have in common? They all qualify for funding under the state’s small business express program.
"I’ve been doing economic development in the state of Connecticut for 30 years. It’s probably one of the better pieces of legislation that’s had immediate and substantial impact that I’ve ever seen.”
That’s Donna Wertenbach, of the Community Economic Development Fund. Hers is one of several agencies around the state that helps the state to administer the loan and grant program.
“It definitely is one of the few public sector initiatives that I’ve seen that is truly stimulating the economy.”
There are two different loan pools companies can apply for. One merely requires that companies retain the jobs they have. The other makes them commit legally to creating at least one new job. Wertenbach says when they began to offer the program, CEDF assumed they would see higher demand for the first option.
“And we were absolutely wrong. There is far greater demand for the job creation loan program, which I think is a really good indication of where we’re going.”
“The question is when you spend state money are you spending it on something that wouldn’t have happened anyway, and you can never know.”
That’s Dan Haar, business colunist for the Hartford Courant. He says Small Business Express creates a positive image for the state in the business community, and many of the deals make good sense. But he says the scattershot nature of the program means some do not.
“Yes, you can create a job by giving $52,000 to a tree care company in Middlebury. You’re taking $52,000 from the taxpayers in order to do that. And there’s no necessary reason for giving money to a tree care company in a state where hundreds of tree care companies emerged as we saw last fall, when we needed them.”
He believes the state should be targeting its aid much more strategically.
“It should be an on-off switch. If a company is not developing a product or service that is either in a growth industry in Connecticut where we need to incentivize that growth, or bringing in money from outside Connecticut, customers outside Connecticut, then it shouldn’t get money from state taxpayers.”
Catherine Smith is Commissioner of the Department of Economic and Community Development, the agency behind small business express.
“We do have a strategy around where we want to make significant investments for growing, around certain clusters which we see as having great potential. The bigger dollars, the Jackson Laboratory investments, some of the First Five type of companies – that’s where I think you’re going to see us try to be investing in those clusters, those parts of our economy that we see as having the best potential for future growth.”
Small business express she says, is not supposed to be selective. It’s about keeping the lights on in Connecticut’s local communities.
“We also know that small business is a driver of economic activity within the state. And a lot of the small businesses that we’re funding through the small business express program are truly the backbone of our local economies.”
She says so far, five to six percent of the applicant pool has been rejected because of concerns about their financial stability, but no narrower conditions have been set on the money. And that’s raised a second concern. Small business express was funded out of a $100 million pool of cash set aside by last year’s special session on jobs. Republicans have expressed fears that the wild popularity of small business express means that it will be way oversubscribed. House Minority Leader Larry Cafero during this week’s special session which extended the availability of Small business express.
“We might be giving false hope to those companies between 50 and 100 employees, because even if we pass the legislation and they’re gung ho to apply for our small business express, there’s probably no more money left.”
Senate President Don Williams, who’s made a special project of expanding the small business express program says he’s open to renewing the funding in the future. He also tried to allay concerns about another change, which could see out of state companies apply for the cash. He said that change is all about promoting insourcing.
“Encouraging companies that have jobs elsewhere, including overseas, to bring those jobs home to Connecticut, and what we realized is we would be excluding companies that had jobs either overseas or in other states with the current language.”
Most people agree this particular program has been so well publicized it’s seen record uptake for a state sponsored economic incentive program. What effects it truly has on the state’s economy are still up for debate.
For WNPR, I'm Harriet Jones.