The Glendening administration asked lawmakers in Annapolis yesterday for two economic development funds aimed at wooing growth industries and promoting small businesses.
Gov. Parris N. Glendening has proposed putting $5 million into a revolving fund to give low-interest loans to businesses in such expanding industries as aerospace, biotechnology or financial services.
The governor also wants to make $2 million available next year for loans and other help to small businesses that have been denied private financing.
Administration officials told members of the Senate Budget and Taxation Committee that Maryland needs a revolving business loan fund to compete with neighboring states for economic development. Eligible businesses could borrow $500,000 or more to use for acquiring land, constructing buildings or buying equipment.
"We live in dangerous waters," said Richard C. Mike Lewin, state business and economic development secretary.
Pennsylvania, Virginia, Delaware and West Virginia have revolving loan funds of more than $100 million to lure industry, he said, adding, "We must not be left behind."
Panel members seemed divided on whether the proposal, called the Economic Development Assistance Fund, was big enough or necessary.
Sen. Thomas M. Middleton, a Charles County Democrat, asked why Glendening did not seek a larger fund, given the amounts being lent by competing states. The administration has proposed increasing the fund to $50 million over five years.
Lewin said he hoped to accelerate the growth, "but we should see how the fund works and the demands for it before we ask."
Sen. Robert R. Neall suggested the state would be competing with private banks by lending directly to businesses. "Why are we getting into the direct loan business?" asked the Anne Arundel County Republican.
"We're in the business because we have to be competitive with our sister states," Lewin responded.
Maryland is one of eight states without a revolving business loan fund, noted Randall M. Griffin, vice chairman of the state Economic Development Commission.
'Jump-start' small business
The administration's Competitive Advantage Financing Fund for small businesses, proposed at $2 million, would increase to $10 million over five years.
Lewin said Maryland needs to help "jump-start" budding entrepreneurs because they generate 80 percent of job growth. Eligible businesses could get loans ranging from $10,000 to $100,000, or the state could subsidize or guarantee private financing.
If the General Assembly approves the two proposals, the state Department of Business and Economic Development would have 18 loan programs -- which Middleton suggested are too many to manage efficiently. Lewin agreed, saying he has launched a review of his agency's loan funds.
"There are far too many of these independent programs," Lewin said. "In the next six months, we'll be working to prepare legislation which will consolidate all these programs."
Pub Date: 2/18/99