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Revolving loan boosts local economy

Program invests $500,000 in 10 years

February 10, 2010
In the last few years, Crawford County officials have been working hard to attract new businesses. They've created an economic development program to shake the bushes and flush out those interested in investing in a county with a dependable workforce, great schools and a beautiful rural place to live and work. And the county, through its Revolving Loan Fund, is also working to promote from within — to help local business owners expand — and to give county residents a chance to start new businesses.

The Revolving Loan Fund program, administered by Indiana 15 Regional Planning Commission and a local board of directors, has been working behind the scenes for years to help fund local business ideas and create much-needed jobs for the county without tapping into county funds.

In a recent press release, the Crawford County Revolving Loan Fund announced that 2009 had been a successful year and that $90,000 had been loaned to small businesses in the county. In partnership with local banks, the funds boosted the local economy by leveraging $617,000 of private investment. These investments are expected to create up to 15 new jobs.

The Revolving Loan Fund, which was founded in 2000, has loaned out more than $500,000 and has leveraged nearly $2 million in private investment as well as created an estimated 28 jobs in Crawford County.

The fund began with an Economic Development Agency grant and a match from three local banks. The money was then used for loans to prospective businesses that, in turn, paid back the money, which was reused to make more loans. The interest on the loans is usually at bank rates or slightly lower.

"These loans have helped several people in the county," RFL board member Bill Byrd of Milltown said. "The concept is really good and the banks support it. Of course, the business owners must get a primary loan from a bank or have their own start-up money. The Revolving Loan Fund will then supply a secondary loan to help get the business up and running. It's really a simple program, and the funds are available. We have money to loan right now."

The loans are mostly used to boost the success rate of new businesses and the expansion of existing businesses. The money also can be used for short-term working capital.

"The loans help create business," said Dr. Gerald Ramsey, president of the board of directors. "Crawford County is a great place to live but not a great place to make a living. That really needs to change.

"There's all kinds of businesses that can succeed here. Things like day cares free up parents to get a job. Other small businesses create jobs, and we need all of those we can get. So, we're here to promote more jobs, and the number of loans we make have an impact on the number of new jobs. This program is not set up to make a profit. When money is repaid, it keeps going in the form of more loans. And once the loans are repaid, it becomes ours and we have more control locally," he said.

"We have a great board and we all want to do something for the county. The (county) commissioners and council realize that, and we have great support from the county. The money is mainly federal and state funds and remains in an account that we can draw from as needed."

The loans are somewhat flexible and can be customized to fit the needs of different businesses.

"The guideline we normally use is $2 to $1," said Michael Cummings, project administrator for Indiana 15 Regional Planning Commission. "In other words, we'll put in a dollar for every two dollars the owners or their bank puts into it. The banks like it because it reduces their risk. And our interest rate is usually a little lower than the banks, so it's a good deal for everyone involved."

The fund has helped numerous small businesses get started in Crawford County since 2000. Most have succeeded and are still thriving. Since the Revolving Loan Fund started, only one business has defaulted on a loan.

"We try to structure payments to help keep people in business," Ramsey said. "Our success rate is really good and some from other areas have come here to see what we're doing. We got together as a good board, and Indiana 15 has been wonderful. I've enjoyed working side by side with them. We've funded everything from child care centers to sawmills, and having local people on the board is an advantage because we know a lot about the people and who can really be trusted. This is like a partnership. If we all work together, everyone will succeed, including the county."

The Revolving Loan Fund now has about $100,000 available for loans. Anyone with a business plan can apply for help from the board. The first step is to contact Don DuBois, Crawford County economic development director, at 739-2248 and present the idea or plan. If the plan seems feasible, DuBois will set up a meeting with the Revolving Loan Fund board for consideration of the project funding.

"A lot of people have good ideas," Ramsey said. "We want to help turn those ideas into successful businesses."

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