BRUNSWICK — When your friends and neighbors head to the polls Nov. 4, many will surely share my concern about Maine’s sluggish economic recovery from the Great Recession.
They can make a proactive choice to support Maine’s innovative, job-creating small businesses by voting “yes” on bond Question 3. Small businesses are Maine’s economic backbone, generating 60 percent of our jobs and sustaining the vitality of our communities.
about the author
David Vail of Brunswick is Adams Catlin Professor of Economics emeritus at Bowdoin College and a board member of CEI.
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A “yes” result on Question 3 will provide a total of $12 million in bond funds to replenish two of the Finance Authority of Maine’s successful small-business lending programs. Eight million dollars will be earmarked for FAME’s Regional Economic Development Revolving Loan Fund.
Since the Legislature established the revolving loan fund in 1993, its $16.2 million in loans to 772 small businesses have leveraged $259 million in additional private and public financing – a 16-to-1 ratio. The revolving loans have helped to create or retain more than 10,000 jobs, in every corner of the state.
In essence, the revolving loan fund helps both startups and growing businesses overcome their limited access to capital through traditional financial markets. Typically, it enables community-based financial intermediaries, such as CEI and Community Concepts Finance Corp., to partner with private-sector lenders, contributing “patient capital” that reduces the banks’ risk and overcomes their reluctance to lend, while also giving entrepreneurs access to investment capital on more flexible terms.
To improve the likelihood of investment success, the community lending organizations very often couple their financial commitments with business counseling and technical assistance that runs the gamut from product development to marketing guidance.
The Regional Economic Development Revolving Loan Fund’s track record as a catalyst for small-business development and job creation is well illustrated by three success stories from previous rounds of funding.
Artel is a fast-growing biotechnology equipment supplier, with 60 employees and national markets that include hospitals, crime labs and pharmaceutical research centers. Artel began in 1982 as a two-person partnership producing circuit boards in a log building on the grounds of a closed Westbrook lumber yard.
As Artel’s president, Kirby Pilcher, explains, “Financing through RDRLP and the Maine Technology Institute … was instrumental for each of the company’s surges forward.” Most recently, state support enabled Artel to bring to market its most sophisticated product yet – a $60,000 micro-technology quality control device.
In the information technology sector, Seafax has become a leading provider of business information for the North American food industry. With funds from FAME’s revolving loan fund, extended through CEI, Seafax secured a bank loan to finance acquisition that preserved 55 jobs in Maine in 2001. Since then, the Cumberland company has tripled its revenue and now has 85 employees.
This year’s Question 3 bond puts special emphasis on “flexible loans to small businesses to create jobs, revitalize downtowns, and strengthen the rural economy.” An excellent example of the revolving loan fund’s potential to revitalize rural economies is its loan to Tilton’s Market in Buckfield.
After serving as “the heart of Buckfield” for 75 years, Tilton’s went out of business and prospective new owners could not secure commercial bank credit. Thanks to a $120,000 loan facilitated by Community Concepts Finance Corp., Tilton’s is once again serving the community.
The lesser-known but no less important Commercial Loan Insurance portion of the ballot has also spurred small business.
Three Rivers Whitewater is a prime example of Maine’s natural resources and tourism industry. Headquartered in The Forks, the small business benefited from the Commercial Loan Insurance program, which provided insurance on its two mortgages, enabling owners to get the loan they needed to grow over the past 17 years.
The Question 3 bond to replenish the Regional Economic Development Revolving Loan Fund was designed by the Legislature’s Select Committee on Maine’s Workforce and Economic Future. It passed the Legislature last spring with overwhelming bipartisan support.
Multiple organizations focused on fueling Maine’s growth support these two programs, including GrowSmart Maine, the Maine Real Estate and Development Association, the Maine Tourism Association and banking leaders such as Jeanne Hulitt, president of Northeast Bank and former head of the Small Business Administration, and Yellow Light Breen, senior vice president at Bangor Savings.
To ensure a future of dynamic small businesses, quality jobs and thriving communities, Question 3 also deserves your support Nov. 4.
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