Despite Gov. Bill Ritter’s attempt to ignite banks’ interest in a stimulus-funded loan program for small businesses, the emergency aid is still lagging and businesses are still suffering.
Some gains have been made, government records show. By October, Colorado banks had issued 39 loans worth $1.2 million through the America’s Recovery Capital program, lifting the state from the bottom of the pack nationally toward the middle. Nineteen states have made fewer loans than Colorado. And the number of banks in the state embracing the program has swelled to 16 from just a handful last summer.
But state officials and businesses leaders are still flustered, saying the Small Business Administration needs to consider overhauling the program, given banks’ reluctance to participate and complaints about cumbersome paperwork.
Ritter’s top finance chief has sought to bring SBA officials and banking leaders together to foster more cooperation.
“We’re hoping they will rewrite the guidelines,” said Don Elliman, chairman of the state’s economic recovery board. “When a program doesn’t work — and this one doesn’t seem to be — you’ve got to rework it.”
Revisions considered
Officials with SBA say revisions are under consideration.
“SBA is certainly consulting and talking with Congress about changes, and I know there’s a number of different tracks” being explored, said Daniel Hannaher, SBA regional administrator. “I just don’t have specifics right now.”
In recent months, SBA officials, including chief administrator Karen Mills, have been nudging Colorado banks toward participation, stressing that the loans are 100 percent guaranteed.
But state banking leaders have said the program encourages banks to cater to risky borrowers at a time federal regulators are discouraging them from doing so. They also have complained about paperwork that is too burdensome for the standard $35,000 loan.
Small-businessman snubbed
Colin Shattuck, owner of Denver-based Sportique Scooters, said his bid to get a loan may be a case study for how the program, billed as short-term emergency aid for businesses struggling with existing debt and short-term needs, has failed to deliver.
His company, boasting 25 percent growth per year since 1998, saw a huge drop in sales this year as spring rains dampened scooter enthusiasm, gas prices kept sliding and consumer confidence was shaken. By late summer up to 300 unsold scooters were crowding his warehouse.
Worried he would have to lay off employees to pay the bills, he reached out to several banks for an ARC loan. As with countless other businesses that have contacted the SBA Denver office in recent months with complaints, he was snubbed over and over.
Finally he found a banker with a listening ear at Wells Fargo, but after going through an intensive application process and filling out 35 pages of documents, he has had to wait months for approval. And he’s still not sure he will get it. Wells Fargo executives did not return a phone call from The Denver Post.
In the meantime, Shattuck has been forced to let five employees go.
“I thought they were trying to save jobs with ARC loans,” he said. “Keeping people was at the top of our list. The really small businesses aren’t getting any help is what it boils down to. Every business on my block is struggling, except the marijuana dispensaries.”
Miles Moffeit: 303-954-1415 or mmoffeit@denverpost.com
