REDloans help small businesses get rolling

Published on Thu, May 11, 2006 by ara Nelson

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RED loans help small businesses get rolling

By Tara Nelson

For one Blaine business owner, it was initial costs of starting a small business. For another, it was diversifying her inventory to survive during the low-traffic winter months.

Mary Amsberry, co-owner of Blaine Bouquets and Candy Bouquets, at 625 Peace Portal Drive, said she was one of those people, as she was the recipient of two loans, one in 2000 and another in 2003.

“We’re a small business and we need to be diversified, it’s hard to make it on just gifts or fresh flowers because there’s not enough traffic,” she said. “In 2000, when the book store moved out, we just had a half section of store and we needed to expand. Then, in 2003, we thought the candy bouquets would give us more of a market share.”

That loan gave us her an opportunity to expand her business.
“It was very helpful to our business,” she said. “The process was very easy, very quick, it was great. I’m just surprised that more people haven’t taken advantage of it.”

Since 2000, 22 small business owners in Blaine have borrowed a total of almost $330,000 with zero interest as part of the city’s rural economic development loan program (RED). Blaine city finance director Meredith Riley said most of the loans were used for building improvements or business expansions.

“They’re generally for improvements, but we’ve also helped with equipment or inventory purchases,” Riley said. “The size of the loans vary from $3,000 up to $30,000 and some businesses have more than one loan from us.”

Blaine City Council established the loan program in 2000 after the Washington State Legislature passed a bill that matches city funds of up to $25,000 with state excise tax credits to communities with their own electric utility systems, Riley said.

Since then, the city has forged a cooperative relationship with Sterling Savings Bank which processes the loan applications and processing for a 1 percent origination fee. The city also established a six-member loan review committee in 2000 that consists of representatives from the city, Sterling Savings Bank and the business community.

“It basically works out the state gives us $25,000 credit and then we come up with another $25,000 out of our electric utility fund and we make that money available for loans to small businesses in Blaine,” said Blaine city manager Gary Tomsic.

Although he could not disclose the names of individual business owners downtown, Tomsic said did say the majority of businesses on Peace Portal Drive that have opened within the past five years have received at least one zero-interest, five-year RED loan. Additionally, he said that nine of those loans have since been repaid.

“We’ve never had a default on a loan so it really has been put to good use in the community, however, it’s not an automatic thing,” he said. “There have been a number of requests turned down for various reasons. The committee just doesn’t rubber-stamp an application, they really do look at and interview the person and look at what is being requested and they look at the things that are typically looked at in a loan generally, and in a small business loan, particularly.”

Tomsic said the loan program is part of a wider effort by the city to become more proactive in aiding small business owners in part to maintain a stable and vibrant downtown economy, through job creation and business retention, increases in health and safety, and water and energy use efficiency through infrastructure and building improvements.

“People come in and ask what we are doing to help out small businesses in the community,” he said. “And this is really the most direct way that we can provide assistance.”
Tomsic also suggests business owners or potential business owners contact the Small Business Development Center (SBDC) at Western Washington University for tips on everything from developing a business plan to identifying industry trends and demographics.

“The SBDC is really a great place to have professionals take a look at what you’re proposing to do and to give you suggestions so we’d like to sort of link up the people we see in the loan program because it increases their chance of becoming successful,” he said. “The success rate for small businesses isn’t that high because most people are undercapitalized. When a small business fails in the community it’s not good for anybody.”

Christy Lonquist, owner of Northern Meadows wine and gift shop on Peace Portal Drive, agreed. Lonquist said she learned about the Blaine’s loan program through her consultation with the SBDC before opening her store in December of 2005. She applied for the city’s RED loan to help her with operating costs during the initial few days,such as electricity, heat and some inventory, she said.

We had enough to get everything open and off the ground, it was just a matter of having enough cash in the bank to operate off of and some of it was just sitting there in case,” she said. “So we went to the city for a RED loan and to Sterling Bank to sign the documents and it was done in just a couple of days after it was approved. The whole process took about three or four weeks.”

Lonquist said that despite the paperwork, it was a fairly easy process and that the SBDC was instrumental in the success of her business, helping her with a variety of issues from setting up a business plan to planning follow-up visits on a monthly basis.

“The Small Business Development Center has been a godsend,” she said. “They helped me look at projections and estimate what my income versus debt would be and whether I could even make it in Blaine based on the demographics and the type of products I planned to sell. They helped me set up a business plan as to what I expected to get out of my business and it’s all voluntary. Sherri (Daymon) has spent hours with me. Months before I set up my business. She comes in quarterly now and checks my books and makes sure everything’s on track. So it’s really neat and she just has so many great ideas from insurance to how much your expenditures are. Anything you can think of, she knows.”

For more information about the city of Blaine’s RED loan program, visit www.ci.blaine.wa.us or call 332-8311. The website of the Small Business Development Center at WWU is located at www.cbe.wwu.edu/sbdc. They can be reached at 733-4014.