The federal government has stepped forward with a big pot of money and wants North Idaho to come and get it.
Kootenai, Bonner, Shoshone and Benewah counties have been included on a list of only 35 locations in the United States eligible for guaranteed loans designed to offset job losses from the North American Free Trade Agreement.
“We have $22.5 million available in this program,” North American Development Bank official Robert Turner told regional lenders and business people Wednesday. “It will be distributed on a first-come, first-served basis.”
The development bank is working in conjunction with the Small Business Administration and U.S. Department of Agriculture to pay fees attached to loans guaranteed by those agencies.
Over a two-year period, participating businesses must create or preserve one job for every $35,000 in loan money.
“It’s not often the U.S. government comes along and says, ‘We have a sale on a loan product for you,”’ Turner said. “This is something you can jump on right now. Act quickly because we’re designed to respond quickly.”
The areas designated to take part in the program had “certified job losses” due to NAFTA. In North Idaho, the offer originally was limited to the city of Hayden but later was expanded to surrounding counties.
Daryl Moser, director of rural business-cooperative services for the USDA in Idaho, said Hayden was singled out because of job losses at Louisiana-Pacific Corp.
“That had a big impact,” he said. “The lumber industry in general also was identified because several mills were affected.”
Moser said the loan program “came out of the blue” and that his agency still is getting up to speed on the opportunities it creates for Idaho firms.
“All we know is that there’s a pot there and only three of these NAD Bank loans have been done so far,” Moser said.
To date, the development bank has paid fees on business loans in Texas, New Jersey and Connecticut.
“Idaho could spend as much as we can get our hands on,” Moser said.
Moser has talked to about 50 companies since North Idaho hit the short list for federal funds. Typically, only one in 10 will actually apply for the guaranteed loans, he said.
A Kootenai County software firm says it could increase employment by more than 50 percent if it gets a shot at the bank loan offer.
Smart Shop Software has been in business for 10 years and now employs 30 people at the Cd’A Tech Center. Chairman of the board Michelle Dickman attended Wednesday’s session and handed business cards to prospective lenders.
“I’m looking for expansion capital to add more bodies and brains,” said Dickman, who wants to create 20 new positions at Smart Shop by the end of next year. “Our revenues are 200 percent over last year, so we need people to keep up with that. Their goal of providing additional jobs fits perfectly.”
For Dickman, the federal funding plan could shed new light on an old loan request.
“We’re a technology company and I have had difficulty finding bankers in this area with the sophistication it takes to address our needs,” she said. “I’m hopeful this will open a door we’ve been looking for over the past year.”
Turner said surveys show businesses tend to shy away from SBA and USDA guaranteed loan programs because of the debt load that comes with loan fees.
“Those fees tend to get pretty high,” said Rich Nixon, a commercial lending officer for First Bank in Coeur d’Alene who attended the meeting. If the development bank “is willing to step in and pay those fees, it might bring in some folks who might not otherwise try for a loan.”
Typical fees for an SBA loan range from 3 to 3-7/8 percent.
LeRoy Debes, a USDA rural business specialist based in Spokane, said the federal funds will “create a windfall” for communities surrounding the target loan areas.
“In Idaho, that means a lot of money,” Turner said. “Funds used to guarantee loans in one county will free up money that can go to other counties.”
The bank plans to keep the program in operation until February.
“Our hope is that it will become a moot point and all the money will be gone by then,” Turner said. “And once it’s gone, it’s gone.”
, DataTimes MEMO: This sidebar appeared with the story: HOW THE PROGRAM WORKS: North American Development Bank pays fees on guaranteed SBA and USDA business loans. SBA makes up to $750,000 available to applicants; USDA loan threshold reaches $10 million. Loans are designed to boost employment in communities affected by NAFTA-related job losses. Kootenai, Bonner, Shoshone and Benewah counties are among just 35 locations eligible in the United States. Money is available for working capital, construction, modernization, acquisition, equipment, inventory and development.