Called the Tennessee Small Business Jobs Opportunity Fund, the initiative begins with a $10 million appropriation from the General Assembly, and a consortium of banks throughout the state will add $15 million to the pot, said Matt Kisber, the state's commissioner of economic and community development.
The loans are available to businesses with fewer than 100 employees and will be used to encourage small businesses to expand and create jobs.
"Access to capital for small businesses has been a key initiative for Governor (Phil) Bredesen and the Tennessee General Assembly," Kisber said. "By continuing to develop programs such as this, we are positively influencing how companies create jobs and grow their businesses in Tennessee."
The program will be administered by Pathway Lending, a nonprofit organization that handles other, similar small-business loan programs that include public and private funding, said Clint Gwin, Pathway's president.
Pathway has started soliciting commitments from banks across the state to participate in the new fund and hopes to have the banks' portion in hand within a year, Gwin said.
Unlike a similar program that Pathway administers, which serves only businesses in rural areas, the new program will make loans available to small businesses in all 95 counties.
Interest charges on loans will be at current market rates, Gwin said.
Pathway loans are for a minimum of $35,000, and some businesses are typically excluded from bank loan portfolios at such small levels, according to the criteria listed on the organization's website, www.pathwaylending.org.
Not all are eligibleAmong those not eligible are restaurants and retail clothing stores, real estate speculators, businesses selling primarily alcohol or cigarettes, trucking companies, gambling operations, financial businesses (such as payday lenders) and sex-oriented businesses.
The purpose of the fund is to help small businesses get moving again as the economy struggles to recover from the recession, said state Rep. Craig Fitzhugh, D-Ripley, who also is a banker.
"Small businesses create the majority of new jobs in our communities, and they are playing a major role in the economic recovery of our state," Fitzhugh said. "We must continue to show our support by finding creative and effective ways to develop resources so that businesses in Tennessee cannot only survive, but thrive."
The loans can be used for flood recovery, as well, said Hank Helton, the senior vice president of Pathway who is in charge of the program.
Reach G. Chambers Williams III at 615-259-8076 or cwilliams1@tennessean.com.
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