A low-interest loan program established by the D.C. government to boost small businesses during difficult economic times has generated little interest, in part because few companies qualify, according to one D.C. Council member.
At-large Councilman Kwame Brown, chairman of the economic development committee, said Thursday he would introduce emergency legislation Tuesday to significantly expand the universe of small businesses eligible for loans of up to $15,000.
His resolution would allow either “small” or “disadvantaged” businesses to apply for a piece of the D.C. Certified Business Enterprise Micro Loan Fund. The Department of Small and Local Business Development, which administers the program, now restricts loans to businesses certified as both small and disadvantaged. “If you’re a local business, whether you’re small, disadvantaged or both, you should be able to access the micro loan program,” Brown said. “Clearly they say they don’t interpret it that way, so we’re clarifying. You can’t deny the fact that small businesses need access to capital and are dying.”
There are roughly 700 D.C. businesses registered as both small and disadvantaged, and likely hundreds more that are one or the other.
The four-month-old pilot program has $233,000 available but has yet to distribute a single loan. Only two completed applications have been forwarded to the Washington Area Community Investment Fund, the program’s underwriter, said Lee Smith, DSLBD director.
“We’re doing our best to get the word out,” Smith said. “I would definitely hold off on calling it a success at this point. I definitely think it has the potential to be successful.”
Loans are currently offered only to designated small and disadvantaged business enterprises that are independently owned, operated and controlled. Preference is given to resident-owned businesses and those located in underserved neighborhoods — loans of up to $25,000 are available to businesses on a D.C. Main Streets corridor or in a Neighborhood Investment Fund target area.
The interest rate is generous, prime minus one-quarter percent.
Brown said the next step was to put more money into the fund and increase loan amounts. If the city is going to have a micro-loan program, he said, “it should be funded so it actually does something for the businesses that need it.”
