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The team of Twin County localities and People Inc. will make available a small business loan program, after the state chipped in $200,000.
Virginia Department of Housing and Community Development provided the grant and community action agency People Inc. of Southwest Virginia matched that with $120,000 borrowed from the Small Business Administration, said Robert Goldsmith, People Inc.'s president and CEO.
That means $240,000 will go into a loan fund for starting up new small businesses or expanding existing ones in the Twin Counties, after deducting staffing costs for technical support for the businesses and administrative costs, he explained. These loans target businesses with five employees or fewer.
Loans typically average about $16,000 per business. "A lot of these businesses are self-employment kinds of things," he said.
Speaking for People Inc., Goldsmith said the agency feels positive about partnering with the governing boards of Carroll County, Grayson County and Galax to create this program.
The state grant goes to the counties and the city, and the localities will work in concert with People Inc. to develop a management team, which will review and approve the loans.
"Typically, a borrower for these funds is someone who couldn't get a loan any other way," Goldsmith said.
People Inc. will work closely with the Crossroads Institute and place a staff member, Ernie Maddy, there to work with the loan fund clients.
"Funds repaid to us by borrowers will go back into a dedicated fund for the Twin County area, so this is a fund that should be around for quite a while," Goldsmith said.
Candidates are expected to have strong business plans and repay the loans.
People Inc. have been operating such programs for 17 years, and the agency has made similar loans to Twin County businesses over the years.
In all, People Inc. has made more than a 1,000 loans. The loans typically have a 92 percent repayment rate, so the same money can circulate through the community multiple times and help multiple businesses over the years.
Though the micro-enterprise loans often have an interest rate of prime plus 3 percent, the rate on the Twin County fund is set lower than that.
The ultimate goal of the program is to create 35 jobs in the area.
"Our approach through micro-enterprise development and working with small businesses is to try to create more community-based jobs that we believe will be more stable in the long run than big businesses that may come and go," Goldsmith explained.
"We're really excited about it," he said. "I think it will be a great thing for this effort to create jobs in small businesses, to create more self-employment, especially now when the economy is not so strong...
"I think this is a great time to be doing this sort of project. We expect it will have a significant impact."
Goldsmith believes that all the governing boards will have to adopt resolutions relating to the loan program, as required by the state. So, it may take a month or so for the loan program to get started.
Local officials are pleased that the program has come about after a year of work.
"We're really excited to be working regionally on this project in the process of creating new jobs," said Nikki Shank, assistant county administrator for Carroll. "We're working hard as a region to help facilitate job creation."
• For more information, call Ernie Maddy at (276) 623-9000.