Regional group seeks borrowers

A Spokane group has launched a business development corporation — a state-approved lending agency — to provide loans to small and midsized businesses.

Called the Business Development Corporation of Eastern Washington, the for-profit company is looking for borrowers.

The group received approval from the Washington Department of Financial Institutions in January. Its offices are in the Hutton Building, at 9 S. Washington.

Retired banker Fred Schunter began pushing the formation of the BDC more than three years ago. He and others in the community identified a financing gap affecting young firms that had outgrown start-up funding but weren’t solvent enough to raise money through traditional bank loans, Schunter said.

The effort to start the BDC began just as the regional economy tanked in 2002. Even with an economic rebound, the group feels the need for gap financing remains acute, said David Lisaius, who is the BDC’s president and sole employee.

“If anything, the need is stronger now, with a lot of new companies having formed and in need of financing,” said Lisaius, who has worked with area banks for more than 30 years.

Schunter is chairman of the BDC’s board.

The Spokane-based BDC is the only entity of its kind currently operating in Washington, said Martha Dickens, a spokeswoman for the state Department of Financial Institutions.

Lisaius said state laws covering BDCs require that their loans can be made only to companies that cannot qualify for traditional commercial loans.

“And that’s one way we’ll get our customers; banks will refer those people (not qualifying for a loan) to us,” he said.

If a BDC loan helps a company grow, it will eventually come back to the banks for traditional financing, said Lisaius.

Another expected source of referrals will be organizations that work with young companies, such as the Delta Angel group, Connect Northwest and the Spokane Intercollegiate Research and Technology Institute, said Lisaius.

The BDC has raised about $1 million in capital from a collection of seven Inland Northwest companies and 10 banks. The group expects to continue raising more.

Loans to eligible borrowers will range from $75,000 up to $250,000.

One advantage of the BDC is the ability to distribute risk among the member banks, said Lisaius. The BDC acquires funding from the member banks according to a participation formula, which reduces each bank’s exposure on any loan, said Lisaius.

One of the seven corporate investors is the Northwest Business Development Association, a nonprofit organization that arranges U.S. Small Business Administration loans, where Schunter was president from 2003 until 2005. Before that he was president of Inland Northwest Bank.

The Northwest Business Development Association has agreed to provide office staff that will be paid by the BDC for time and services, said Lisaius.

“One message we want to make clear is that we’re keeping our office and staff expenses low, to have more available” for lending, Schunter said.