Connecticut's Program to Help Small Business

[dollardaze]

State banks have committed to lending a total of $100 million to the state's small and mid-size employers as part of a program to help them ride out these tough economic times.

Under the program announced Friday, the state will back $40 million of those loans to further encourage bankers to keep credit flowing throughout the state.

The loan program is a part of a plan announced by Gov M. Jodi Rell earlier this month to get businesses the credit they need. Rell said Friday the commitment shows that local banks are ready to lend, even if there is a credit crunch nationally.

"Credit is the lifeblood of business," Rell said Friday. "It allows our small and medium-sized employers to buy inventory or raw materials, to expand or to make investments — and that creates all important jobs."
The $100 million includes $60 million in loans from banks in which the Connecticut Development Authority may provide a part of the loan.

The remaining $40 million will be guaranteed by the development authority's URBANK program. Under the program announced Friday, the development authority will raise what it contributes to reserve funds at individual banks that cover defaults on loans made through URBANK.

Currently, the development authority contributes 3% to 5% of the loan total. That contribution will now double, rising to between 6% and 10%.

URBANK offers 30% loan guarantees on loans up to $350,000.

John J. Patrick Jr., chairman and chief executive of Farmington Savings Bank, said the added reserves will help make banks more comfortable in taking a second look at loans they might have not approved initially.

[pennypinch]

This sounds like a good thing for the small business's in the state. These times are difficult for everyone but especially for those who are trying to keep their small business afloat. I know in my state small business's are closing everywhere you look and it is quite sad.