By Bill Britt
Alabama Political Reporter
MONGOMERY-Last week the Alabama House passed a bill that would create a Small Business Financing Authority.
HB600 is a part of the plan devised by House Speaker Mike Hubbard’s Jobs Commission.
“With the economy in the shape it is in and with banks tightening lending this bill will help small business around the state, said the bill’s sponsor, Representative Barry Moore (R-Enterprise). The Financing Authority would be established as an independent entity to assist companies with a variety of credit needs, operating under the Alabama Department of Economic and Community Affairs, or ADECA. Rep. Moore said the bill allows the state to strengthen and streamline ADECA’s existing business loan and grant programs, and allows for further state investment in the future.
“The state received around a 32 million dollar grant from the Federal government called the Small Business Credit Initiative. ADECA had the money but we didn’t have anyway to streamline the process and get the money into the hands of the small business owns,’ said Moore.
The Authority’s board would consist of the Director of ADECA, the Director of the Alabama Development Office, the State Treasurer, one community banker appointed by the Speaker of the House, one banker appointed by the President Pro Tempore of the Senate, and two members appointed by the Governor.
No state money would be used in the program at this time, the authority would operate using only available federal dollars supplied through the U.S. Treasury’s State Small Business Credit Initiative.
Moore a business man says that the loan process will be much simpler than applying for an SBA loan. “One of the great things about this loan process is that it has a lot less red type than an SBA loan,” said Moore.
The criteria for a business to receive a loan are as follows. Eligible Small Business – Must meet one of the following: a. is a for-profit business that (1) has received $10 million or less in annual gross income for 3 years (or less if existence is under 3 years); (2) has fewer than 500 employees as defined in federal law; (3) has a net worth of $2 million or less; and (4) meets other requirements as determined by the authority; or b. a non-profit entity granted tax-exempt status by IRS.
According to Moore others states have seen tremendous success with small business financing authorities. Virginia’s authority has helped facilitate more than $1.5 billion in financing for thousands of new and existing businesses, creating and retaining more than 24,000 jobs. Their program has seen 30-1 private-public funding ratio, and in the first year of operation returned approximately $5.89 in new state revenue for every $1 invested.
House Speaker Mike Hubbard thanked Rep. Moore for working with the Speaker’s Office and ADECA to make this legislation a reality.
“Job creation has been and continues to be our top priority this session,” Speaker Hubbard said. “One of the top inhibitors to small business growth is access to capital. Assisting viable companies attain loans is a real-world way to promote job growth. Rep. Barry Moore has worked diligently on this legislation for almost a year. I appreciate his efforts on this bill, as well as his continued dedication toward looking out for the interests of small businesses.”
Establishing a small business financing authority was a key recommendation of the Speaker’s Commission on Job Creation after its efforts last year seeking ideas on boosting private sector job growth.