THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, March 10, 1995 TAG: 9503100308
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 64 lines
Got a small business that's been left in the lurch by defense downsizing? Or how about an idea to do something other than work for the Pentagon, but can't find the capital?
Well, the state government wants you.
The Virginia Department of Housing and Community Development has set up a $2.9 million revolving loan fund for defense conversion. Housing department officials outlined the program to local economic development officials and bankers at informal meetings Wednesday in Norfolk and on the Peninsula.
``Our focus in this is primarily the small- to medium-sized businesses hurt by defense downsizing,'' said Rob R. Blackmore, housing department deputy director.
Qualifying companies will be able to borrow as much as $200,000 at or below market interest rates for as long as 10 years to help finance projects that reduce their dependence on defense contracting.
Funding for the program comes from the U.S. Commerce Department's Economic Development Administration, which provided $2.1 million. The balance comes from another business development fund operated by the state housing department.
The housing department is already talking with one Hampton Roads company. Chesapeake-based Consolidated Launcher Technology Inc., which makes submarine parts for the Navy, needs financing to develop a rail crossing barrier that rises from the ground as a train approaches. The device would absorb the impact of a car that fails to stop.
To qualify for the loan, a company must get at least 15 percent of its revenue from defense-related activities and demonstrate actual or impending financial damage from defense downsizing.
The state will only provide financing for half of a project's cost. Companies must finance the rest with at least 10 percent cash and bank loans.
``We're not in competition with the banks,'' Blackmore said. ``We want to supplement them.''
For every $10,000 borrowed, at least one permanent, full-time job must be created.
Loan funds can be used for buying land and buildings, constructing new or improving existing facilities, purchasing machinery and equipment, working capital and worker training. A loan can't be used to subsidize a business that is able to borrow from traditional sources, to relocate a business, to refinance debt or to compensate for a fundamental business weakness.
Loan applications will be reviewed and handled by the housing department's staff. Any loan also must be approved by the housing department's board.
The department will then loan the money to a local industrial development authority to be reloaned to the company. ILLUSTRATION: Graphic
TO CALL
For loan information:
Charles H. Gravatt
371-7028
Ray Richeson
371-7070
by CNB