State funds for small businesses proposed Firms in 7 areas could become eligible for low-interest loans


Several hundred small businesses in Anne Arundel neighborhoods teetering between prosperity and blight soon could be eligible for low-interest loans from the state.

On Monday, the County Council is expected to qualify seven county commercial districts for Maryland's Neighborhood Business Development Program. Businesses within those districts would be able to apply to the state Department of Housing and Community Development for low-interest loans ranging from $25,000 to $500,000.

"This is part of an overall business development program within the county," said Lisa Ritter, spokeswoman for County Executive John G. Gary, who is sponsoring the bill. "We realize there are certain areas that could benefit from a little bit of money, not only from a business perspective but from a citizen's perspective."

The seven neighborhoods selected by county economic development officials include Glen Burnie Town Center, Odenton Growth Management Area, Parole Growth Management Area and the strip of Ritchie Highway that runs through Brooklyn Park. Others are Sun Valley and Jumpers Hole Road, the commercial section of Mayo Road in Edgewater and the commercial areas of Deale and Churchton.

"These are areas where reinvestment will be needed to keep them viable," said Ardath M. Cade, the county's human services officer.

County officials say the state loan program is similar to Mr. Gary's plan to revitalize the impoverished Clay Street corridor in Annapolis. The county has established a $100,000 fund for start-up loans and grants for Clay Street merchants.

But the state loan program, just 5 months old, is competitive.

So far, 130 Maryland small businesses have applied for loans and roughly half will receive money from a $7 million fund, said Ellen Janes, the department's assistant secretary for neighborhood revitalization. Decisions on four Anne Arundel projects are pending.

Gov. Parris N. Glendening has included $10 million for the program in his budget for next year.

"It's been remarkable," Ms. Janes said. "This is the most flexible money available. We've seen some really strong projects."

The loans are directed toward small businesses -- which in recent years have found it increasingly difficult to qualify for commercial loans -- in areas that either need a financial injection to keep from slipping into poverty or require money to sustain economic momentum.

The state money -- lent to qualified businesses at interest rates between 3 percent and 6 percent, several points below the market level -- is essentially a matching contribution.

The loans will not pay for more than half of a business venture, and ideally would cover only 25 percent of the cost. For example, a merchant planning a $500,000 store expansion could qualify for no more than a $250,000 loan.

Bill Haig, vice president of The Mattress Store on Generals Highway, said a $50,000 loan would go a long way toward buying inventory, expanding operations and upgrading his fleet of delivery trucks.

The outlet opened 15 years ago, and now sits in the shadow of the Annapolis Mall within the Parole Growth Management Area. "I'd be interested," Mr. Haig said.

But Ethan T. Jones, an assistant office manager at Signs for Tomorrow next door, is skeptical. A state loan, he said, often has too many strings attached. Tax breaks and less regulatory red tape would help the four-employee operation far more, he said.

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