In a time of economic hardship and rising unemployment. Many people are searching for income. Some of these budding entrepreneurs should be given a hand up with a small loan and proper exposure to best business practices. Given the support Wall Street is getting, creating a new business and a job for $500 seems like a bargain.
PATERSON, NJ— For some Silk City entrepreneurs, $500 is enough to get a business rolling or keep it on track.
Jamie Dykes made that discovery while doing research for the Paterson Restoration Corp.'s recently launched micro-loan program, which lets resident business owners borrow amounts from $500 to $10,000.
In starting a business, attorney fees alone often exceed $500. Even mustering enough cash for cleaning supplies can prove a challenge for some, said Dykes, the PRC chairman and president of the Greater Paterson Chamber of Commerce.
"We're looking at a segment of the market that may be very challenged as far as credit history," he said. "They may have no collateral, in the classic sense of the word."
Since the program debuted in October, four entrepreneurs have been awarded loans of $10,000 each, with businesses including a cleaning service and a music production company.
Planning for the micro-loan initiative took two years, with $300,000 in seed money raised through a 30-year-old loan program also administered by the PRC.
Micro-loan applicants must pay a $25 processing fee and take basic business coursework through the William Paterson University Small Business Development Center in Paterson.
"The typical person who comes in here is not experienced in preparing a business plan, but we're encouraged by the progress they make," said Robert Hille, assistant regional director.
Jason Martin said that support was key in his launch of Jus Pray Production, which offers photography and videography services. "Clients have made comments about how well put together the business is," he said.
If applicants are deemed a worthy risk by the PRC's underwriter, approved by its board and given the go-ahead by a staff attorney, they receive loans with an interest rate set at two points above prime. On their own, some owners might be looking at a rate in the upper teens, Dykes said.
"The standards are more lax than a bank's, but the process is similar," Dykes said. "That way the owners have a feel for how things work if they decide to go for more capital down the road."
Source URL: http://unfsbdc.blogspot.com/2009/02/micro-loans-can-help-local.html
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