Salt Lake County is expanding its small business loan program with some financial backing from commercial banks. The fund supplies higher interest loans to businesses that would be otherwise ineligible for traditional bank loans.
The program provides up to $250,000 for high-tech start-ups in Salt Lake County. Speaking inside the headquarters of Fat Pipe, a Murray company that benefited from the program, Salt Lake County Mayor Ben McAdams says the loans encourage economic development without competing with the private sector. But he notes businesses must create at least one job for each $35,000 borrowed and interest rates hover around 15 percent.
“We recognize that these can be high-risk investments and we need to compensate for that risk in the interest rates," McAdams said. "But this may be the only opportunity for financing for some of these businesses.”
Six local banks have offered to contribute $1 million each to the fund, partly a result of pressure from the federal Community Reinvestment Act.
Fat Pipe owner Dr. Ragula Bhaskar said during the recession, he was in need of short-term financing to expand and Salt Lake County was there to bridge the gap.
“Now we have a regular loan from Key Bank," Bhaskar said. "So at the time when you need the money and you need it fast to grow the county came through and then after that we became a regular banking customer.”
Currently five businesses have received loan funds under the expansion and ten applicants are waiting for approval.
County officials say no businesses approved for the program have defaulted on a loan.