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SBA Promotes Opportunities for V.I. Small Businesses

July 16, 2005 – While poor management is the most common reason businesses fail, inadequate or ill-timed financing is a close second, according to the U.S. Small Business Administration.
"Someone with an idea can grow that idea into a dream," said Bill Manger, regional administrator with the SBA, on his first trip this week to the Virgin Islands and Puerto Rico.
The SBA has is promoting its two flagship programs — the 7(a), the most basic and most used loan program that can be used for many small businesses, and the 504, a fixed asset acquisition program.
The 504 offers larger loans of up to $2 million for equipment and real estate, and up to $4 million if there is a manufacturing component to the business.
The lending bank puts up 50 percent, the borrowing company puts up 10 percent and a Certified Development Company puts up 40 percent. A Certified Development Company is a nonprofit that works with the SBA and private sector lenders to provide financing to small businesses.
The 504 is being promoted because it creates jobs. "Given the fact that seven out of 10 jobs come from small businesses, we want to make those businesses grow," said Manger
Fifty 504s were done in Puerto Rico last year, creating one job per $50,000 provided by the SBA. The program allows a business owner to purchase land, construct or purchase buildings, street improvements, utilities, parking lots and landscaping; or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.
Manger, Carmen Culpepper, SBA district director, and Carl C. Christensen, local SBA officer in charge, have been meeting with business partners and the three local banks that participate with the Small Business Administration; Banco Popular, FirstBank and Scotia Bank.
Manger said Lt. Gov. Vargrave Richards showed great interest in the 504 program when they met on St. Croix earlier in the week. Manger says he's also optimistic after meeting with the banks.
Until now there have been no 504s in the Virgin Islands because there is no CDC to service the area, but Culpepper says it may be possible to use the CDC in Puerto Rico. Christensen says he sees the program really working on St. Croix.
The SBA will hold a seminar later this year to educate bankers, real estate agents, businesses and accountants on the 504. For more information on the SBA log onto "www.sba.gov."

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