Loan program boosts small businesses

By Brent Begin
Examiner Staff Writer 4/3/09

Keeping jobs local: Under a new loan program, small businesses in The City that hire new workers would be exempt from the per-employee payroll tax for two years.Cindy Chew/The ExaminerSAN FRANCISCO – Nearly $2 million will be available to make low-interest loans to San Francisco’s small businesses, Mayor Gavin Newsom announced Thursday.

The small business loan fund will be administered through a San Francisco nonprofit. Financial backing will include $800,000 in federal funds granted to The City and up to $1 million in private capital the nonprofit is expected to leverage from the federal funds.

The program will provide microloans of up to $50,000 to small businesses operating in San Francisco that create and retain jobs for low-to-moderate income residents, according to a statement from the Mayor’s Office.

Interest rates will range from 4 to 6 percent, with a loan term not to exceed five years.

The nonprofit, TMC Development Working Solutions, in addition to securing the added funding, will administer the program during the next two years. There is a possibility of additional federal dollars being added to the fund, according to the Mayor’s Office. TMC Development is a San Francisco-based nonprofit that provides microloans to businesses in the Bay Area.

Scott Hauge, president of Small Business California, said there is clearly a need for this kind of program because of lending problems across the country.

“We’ll take anything we can get,” he said.

The plan is one of several Newsom has been working on to support local business leaders and stimulate the economy.

Businesses hiring new workers would be exempt from the payroll tax — a 1.5 percent tariff on the total wages paid to workers — for the next two years if legislation is approved by the Board of Supervisors. Other local stimulus ideas include capital project spending and offering tax credits on new equipment purchases.