Grow-nomics

Reps from the Community Capital Development, Shorebank Enterprise Cascadia and Rainier Valley Community Development Fund with Seattle Mayor

Factories need to re-tool and workers re-train. Consumers have to tighten their belts, retire some debt and realize there's no shame - indeed, there's a great deal of sense - in living within your means. Homebuyers have to venture back into the housing market and financial institutions have start lending again. Local governments, housing authorities and tribal organizations that receive Recovery Act funds have to get the money onto the streets quickly and make sure it's spent effectively and efficiently in revitalizing their communities and putting people back to work.

Then there's one of the roads to recovery that the City of Seattle is taking. Focusing on small business. When first advanced 15 years ago the notion seemed revolutionary. But today it's an economic fact of life - small business creates a vastly disproportionate share of the net new jobs in our economy. That's the good news.

The bad news, Mayor Greg Nickels noted at an October press conference at Alpha Cine, a motion picture lab in southeast Seattle, is that small businesses are hurting just as much - if not more - as anyone else these days.

The reason's clear... They're having difficulty accessing capital. As of last year, the Mayor reported, "only 28 percent of small businesses were using bank loans, the lowest rate since 1993." Restoring access to capital, said the Mayor, is a "critical need" of small business and a "key to achieve economic recovery."

Thanks to the City of Seattle, the Seattle Foundation, the National Development Council and, last but not least, the American Recovery and Reinvestment Act passed earlier this year, "help" - in the form of capital - "is on the way."

The City is using multiple approaches. First, it's dedicated $1.4 million in CDBG funds from the Recovery Act to small business lending. The funds will be disbursed to small businesses and micro-enterprises through three local organizations - the Community Capital Development, Shorebank Enterprise Cascadia and Rainier Valley Community Development Fund. "As a group," said Jim Thomas of Community Capital, "we will be able to reach a broad spectrum of Seattle small businesses."

Second, thanks to contributions from the City and the Seattle Foundation with leveraging by the National Development Council, the City has launched an $8 million Grow Seattle Fund. The Fund will provide low-interest loans that will "help loosen up credit" for small- and medium-sized businesses. Targeted to business improvement and expansion, firms will be able to use Grow Seattle funds for working capital, to acquire machinery or equipment, to buy real estate or, even, to refinance existing debt.

Will targeting Recovery Act and Grow Seattle funds work? If Alpha Cine is an example, the answer's yes. It's one of the first small firms to access capital through the Grow Seattle Fund and, as a result, has retained more than 130 "livable wage" jobs in southeast Seattle. Even better, in the weeks since the Mayor's press conference, more than 30 small and medium-sized businesses have contacted the City's Office of Economic Development for more information about the new programs. As the Mayor said, the new programs are "key" to unlocking the door to capital and putting Seattle businesses back on the road to economic recovery.

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