The federal government included a large chunk of funding for the Small Business Credit Initiative in the Jobs Act was signed in September 2010. Great idea! Let’s take some funds and use it to help small businesses and start ups get the funding that banks were not giving out. The problem with it was that they hadn’t come up with the way to get the funds from the government and into the hands of small businesses!
Cut to the end of 2011 (yes more than a year later)- each state was given the task of figuring out how they were going to disburse the money and, after our usual extensive process, the Washington State Commerce department (the intial receipient of the funds) has come up with a three part plan to use the funds that is really quite brilliant.
First Commerce partnered up with Craft3 (formerly Enterprise Cascadia) to help screen applicants and do the actual funding of projects between $1 million and $5 million. Craft3 has received $8.7 million of the $19.7 million in funds and they will be leveraging with private lending and investment to help companies that are facing challenges securing funding through normal banking institutions. Their goal is to lend $300 million in total funds to these companies. My first few experiences with them are encouraging and I think they will be a great funding source going forward.
There are two additional funding sources that are using the Commerce Department funds. One is the Commerce Department itself, through its Capital Access Program ($6 million) are lending amounts for $50,000 to $100,000 to small businesses and will also provide guarantees to banks. I have not had a chance to try out this program yet with any of my clients but I am hopeful that some of the small businesses that ask for my help will be able to attain their goals with this new option, since its been particularly difficult for them in the current market.
The rest of the funds ($5 million) went to the W Fund to help specifically fund startups using research from the various universities in Washington. They are focusing on life sciences and technology companies that are generated from our state’s research facilities in return for them basing their companies in Washington State. I won’t be doing any work with this group, although I think its a great idea to keep the research coming out of Washington institutions here in the state.
All three pools of funds are specifically oriented to saving and growing the job base in the state and from what I know of the Craft3 project they are doing a good job of working with local companies that will be our superstars going forward. I look forward to seeing how well the other two fund pools perform but I am hopefull that this will be one government program that will actually do a good bit of work towards getting our Washington citizens employed and productive again!