The $42 billion small business package signed into law last week will help Vermont companies gain access to much-needed funds, helping them grow – and create jobs. The legislation includes $12 billion in tax relief and a $30 billion lending fund.
“I can tell you, we are really excited about this and our lenders are really excited about it, too. This really expands what they can do,” said Bernie Villemaire, a lender relations specialist, who works in the Montpelier, Vt., office of the U.S. Small Business Administration. The law was also praised by the Vermont Chamber of Commerce.
Under the new law’s provisions, no fees will be charged to borrowers, saving small businesses thousands of dollars to conduct the loan transaction, said Villemaire. The average size loan borrowed by Vermont businesses is $170,000, he said. Since the fees will be waived to encouraged economic growth, Vermont’s small businesses taking the average size loan will save roughly $4,000 in fees until the end of 2010, he said.
“It’s going to have a major impact in Vermont. This basically will really benefit the small business community,” Villemaire said, noting the legislation increases the amount of the loan guaranteed by the federal government to 90 percent, eliminating the bulk of the risk for local banks.
Thanks to the passage of the Small Business Jobs Act, the U.S. Small Business Administration has awarded $1.5 million in loans to five Vermont firms that had applied for small business loans. The loans are credited with creating 25 jobs.
Thomas Coleman, a dentist in Brandon, Vt. is one of the businesses that was aided through the new law. Coleman said he needs the $170,000 loan to “help grow the business” and “avoid the possibility of layoffs.” A provision in the law waives a transaction fee for the loan, a feature which will also save him $2,000.
<<Click here to learn more and to obtain contact information for the Vermont District Office of the U.S. Small Business Administration.>>
“In the midst of the very difficult recession that we’re in, helping small businesses receive affordable credit is imperative," said Sen. Bernie Sanders. "Small business creates most of the new jobs in this country and it’s important that we do everything we can to help them."
The other Vermont companies to receive loans through the program, so far, are: Dalee Fed Inc. in Barre; Fischer’s Fancies LLC in Colchester; Hidden Waters LLC of West Halifax; Plageman, Gagnon & Daughters in Williston; and Rocky River Capital Partners LLC in South Burlington.
Dalee Fed received the largest loan, $648,000. The loan is credited with creating 10 jobs.
While Vermont has dodged the worst of the most severe economic downturn since the Great Depression, more than 21,000 Vermonters remained jobless in August - a 6 percent unemployment rate. Thousands of Vermonters have lost their jobs in the economic collapse. At the start of the recession, in December 2007, 14,300 Vermonters were unemployed and the jobless rate was 4 percent.
The law creates a “small business lending fund” that would make $30 billion in capital available to small banks with incentives to increase small business lending, potentially supporting several multiples of that amount in new credit. The measure also includes $12 billion in tax relief, which will, among other things, permit up to $500,000 in capital investments that business can expense.
The legislation will serve as “a tool” for future job creation, according to Betsy Bishop, the executive director of the Vermont Chamber of Commerce.
“Right now a lot of Vermont businesses are in retention mode, trying to retain the employees they have,” said Bishop. “As we climb our way out of the recession this recession, employers are looking to grow.”
“Any time we can have greater access to capital… I think that’s a good thing,” she said.
To read more about the law and the loans already issued, click here.