Small business owners from around the Cape Region gathered at the Rehoboth Beach Convention Center, Monday, May 11, for a forum on the recently passed federal stimulus package and its impact on small businesses.
The forum was an opportunity for owners to get more information on the Delaware Economic Development Office’s (DEDO’s) new small business stimulus program, LIFT, or Limited Investment for Financial Traction.
DEDO, along with the Lieutenant Governor’s Office and the Rehoboth Beach-Dewey Beach Chamber of Commerce, hosted the event.
The program targets businesses with three to 50 employees with existing lines of credit. DEDO’s program offers a seven-year loan with the bank with the first two years requiring no payments. Borrowers will make principal-only payments on their line of credit for the remaining five years. The maximum size loan is $25,000.
Wilmington Savings Fund Society (WSFS) is one of the banks in the area participating in the program. Scott Swingle, representing WSFS, said, “I think we’ve actually done four of those loans. Being able to defer the interest payments I’m sure will help the businesses manage cash flow.”
Among the objectives of the forum were outlining federal Small Business Administration programs that provide direct and immediate assistance to small businesses.
Representing the administration was Arline Brex, who said her agency does not get direct money but instead guarantees loans from banks. She said the administration has relaxed some of the repayment requirements to help relieve stress on small businesses.
Prior to the stimulus act, Brex said, the administration guaranteed up to 85 percent of a $150,000 loan and up to 75 percent of a loan of more than $150,000. Since the act was passed, the administration guarantees 90 percent of loans. The administration has also removed borrower fees. Another new program is what Brex called a 504 loan.
“It’s for commercial property. If a small business owner wants to buy, build, remodel or buy land to have their own building, SBA guarantees 40 percent of that loan,” she said.
The limit of that loan used to be $1.5 million but has since been increased to $2 million.
Finally, Brex said a new loan, an ARC loan, goes up to $35,000 and there is no interest on the loan from the borrower. The administration will reimburse the bank for the interest, and payments are not required for 12 months after the loan is dispersed. While there are no guidelines for the loans yet, the idea is to help viable businesses having trouble making payments.
Most loans available through the administration apply to current businesses. Brex said there are not many available for startups, although there is one geared toward veterans and widows of veterans.
William Pfaff, director of the Delaware Small Business Development Center Network in Sussex County, said his department helps train, educate and provide planning for small businesses. Pfaff also said the department can help with financing, loans and creating a marketing strategy for small businesses.
One of the business owners who has worked with Pfaff is Richard Kirchhoff, co-owner of the Canalside-Inn-Rehoboth.
“Our business has been good; it’s growing,” he said. “But I have to put money aside to make it through the winter months when we don’t have the business and we have to make the improvements and repairs. It’s all a juggling game to make cash flow.”
Other speakers came from state organizations such as the Department of Transportation and Department of Natural Resources and Environmental Control, as well as federal agencies like the U.S. Department of Agriculture.
The agencies were present to help identify stimulus-funded programs and opportunities for small businesses.
“The last six to nine months have obviously been challenging for everyone,” Swingle said. “From the bank’s perspective, we’re all in this together, and we all want to work together to work our way through this.”
