Amid tight credit markets, a new local program is looking to help entrepreneurs obtain loans they need for business ideas that otherwise might not have access to cash. Our Steve Ference reports.
ALBANY, N.Y. -- "We see about a thousand people a year and hundreds can't get financing," said William Brigham, UAlbany's Small Business Development Center Director.
What happens to credit markets is complicated, behind-the-scenes stuff, but crucial to business and the economy.
"I hate to admit how many businesses have closed over the last two-three years," said Brigham. "If there's no credit what do they do. You can't talk to creditors ten hours a day and still run a business."
So the question has been how to grow businesses, when an entrepreneur has a good idea, but may not look like the best risk for a bank?
Michael J. Castellana, SEFCU President and CEO, said, "We believe this type of program can not only change the life of that small business entrepreneur, but for all of the people that they're going to hire along the way."
Enter a new "microloan program" that SEFCU is supporting with $2.5 million, along with a $96,000 state grant to coordinate the program.
Castellana said, "Under the current system the more you have, the more you get."
But under the new program, anyone with a good idea has a chance to get access to capital.
"It is a groundbreaking program because we are taking a different methodology," explained Brigham. "We're taking students to mentor these entrepreneurs which is really cool. And involving faculty to run the program."
And obtaining a loan isn't as simple as doing a credit check. They say that's a good thing.
Brigham said, "What we really are looking for is people with good character. It's going to take intensive interview and evaluation."
"We know we have returning veterans who may not have cash and collateral, but may have the character and vision," University at Albany School of Social Welfare Dean Katharine Briar-Lawson said.
Applicant approval also means a 10-week training program, working with SEFCU and also UAlbany's school of Business and School of Social Welfare to polish their business skills.
Empire State Development Capital Region Regional Director Peter Wohl said, "It's a model of funding not just for the state but for the country."
Castellana put it like this: "In five to ten years, I hope this goes well beyond SEFCU's ability to fund it. I hope it's a model that will be commercially adaptable, that we can get other banking partners to come in and say that has value not only to the shareholders, but to the community."