Localities backing micro-loan program

-A A +A
By Ben Bomberger, Reporter

INDEPENDENCE — Grayson County became the final piece of the puzzle for a regional grant application to bring a micro-lending business to the Twin Counties.

The board of supervisors approved the application during its regular meeting Oct. 9 — joining the City of Galax and Carroll County.

The process began in July when Brian Phipps of People Inc. of Abingdon approached the boards about the business that provides a micro-lending program for emerging businesses in the Twin Counties.

Both Galax and Carroll approved a resolution to submit the application last month, through the Virginia Community Development Block Grant Citizen Participation Plan for Local Government Applicants.

The $200,000 grant — in addition to $120,000 from People Inc. — will be used to make loans available to people interested in opening a business in the Twin Counties.

The resolution passed by all three localities states that "the proposed project will meet the national objective of providing benefit to low- and moderate-income persons by creating at least 18 jobs for low-income individuals and by creating or sustaining 15 businesses that are either owned by or which employ or otherwise benefit low-income individuals."

During the supervisors' July meeting, Phipps said decisions about loan approval would come from a management team comprised of representatives from each locality. Phipps suggested using members from the Blue Ridge Crossroads Economic Development Authority to serve on that management team, because the authority already has representatives from each localities.

The business loans will be available for $35,000 and less, with an interest rate at or slightly above prime.

People Inc. is a private, non-profit organization similar to Rooftop of Virginia, but with a different slant on its programs.

Plans include going hand-in-hand with Crossroads Institute in Galax and working closely with Dallas Garrett, director of the regional Small Business Development Center, and Regional Economic Development Director Neal Satterwhite.

Phipps said People Inc. will work one-on-one with prospective business owners to create a business plan. Because Garrett already does this locally, People Inc. would not impose unless needed.

Of the $200,000 grant, roughly half will go towards implementing the program in the Twin Counties, while the remaining amount — along with the $120,000 People Inc. will put in — will be used to fund loans.

"We hope to bring additional funding resources in as needed in the future," said Phipps.

Grayson Supervisors' Chairman Mike Maynard noted that a member of the development authority was in the banking business and said the program would not compete with local banks, because most banks do not deal with loans of $10,000 to $15,000.

"This program will help people get started who are struggling to get capital," said Maynard during the July meeting.

People Inc. plans to work with local banks to provide larger loans if needed.

For example, if someone needed a $100,000 loan, banks usually require having a large percentage, such as 20 percent, in hand already.

Phipps said People Inc. could provide that extra 20 percent to help a person receive needed funding.

Projected benefits will include providing training, coaching and/or business technical assistance to 50 clients interested in small business ownership that will benefit low- to moderate-income individuals; providing 15 or more loans to entrepreneurs; and creating and retaining at least 35 jobs.

The project will be overseen by the local management team, while the loan profile services will be managed by People Inc.