In 2014, Discover Bank, the Wilmington Office of Economic Development, Cozen O’Connor and he National Development Council entered into a partnership to provide funding for businesses in Wilmington, known as the Grow Wilmington Fund. The program began with $1 million in seed money provided by the Urban Development Action Grant Corporation. UDAG leveraged $3 million in private funds to create a $4 million fund that offers long-term, low-interest loans to small businesses in Wilmington. The program was such a success in Wilmington, Discover Bank decided to partner with West End, National Development Council and Longwood Foundation to expand it throughout Delaware.
“With the recent $500,000 investment from our latest partner, the State through the Division of Small Business Development and Tourism, Grow Delaware Fund now has a loan portfolio of $5 million available for businesses.” Deepa Singh, Program Manager for the Fund said. “What we are trying to do now is to let businesses in Sussex County know the fund exists.” Ms. Singh said that Amity Coffee Roasters in Greenwood was currently considering applying for funding. They are considered a Main Street business and employ less than 5 people. Ms. Singh said “We have helped manufacturing and service businesses with over 50 employees with millions in revenue as well as smaller Main Street businesses that provide essential services and are fundamental to the fabric of our neighborhoods.”
Funding can be used for working capital, to purchase machinery or equipment, acquisition of real estate or to renovate an owner-occupied business. It can also be used for tenant improvements or to refinance existing debt. Ms. Singh said that the fund is not designed for start-up companies, although they will review new businesses on a case-by-case basis, but more designed for established businesses who may need to improve cash flow.
“Governor Carney is strongly focused on small businesses and improving economic growth in the state,” Cerron Cade, Director of the Division of Small Business, Development and Tourism, said. “The state is looking at many ways to increase profit and growth, something this fund is designed to do. Right now, Delaware is undergoing a shift from large manufacturing businesses to companies providing services using fewer employees. What we are finding is that this seems to keep the economy more stable. If a large 600 employee company leaves the state or closes, it is difficult to find jobs for that many people. A small 50 person company that fails does not place such a burden on the economy, so the state is now focusing more on helping smaller businesses improve cash flow.” Michael Chesney, Director of Communications for the Division of Small Business, Development and Tourism office, said that 96 percent of businesses have fewer than 50 employees in the state.
There are closing costs involved in the loan. Once it is approved, the borrower pays a one percent deposit at commitment letter signing for appraisal, legal and other costs incurred prior to closing, but closing costs may be financed into the loan. Interest rates are 7-year treasury +3.17 percent with an indicative rate of 5.25 as of August 2, 2017. Borrowers may also choose interest-only payment periods.
“We have learned so much about the small businesses in our state through this program,” Ms. Singh said. “There are companies here in the state who have high-tech Department of Defense contracts. Another business creates small plastic balls that keep your dishwasher or coffeemaker operating. We can also lend money to businesses that banks consider high risk, like restaurants. They may be high-risk, but they need support.” Ms. Singh said that even if the Grow Delaware Fund cannot help a company, they have a network of support agencies that they can refer a business to who may be able to help them.
For more information, contact the Grow Delaware Fund by email at email@example.com or by phone at 302-658-4171, Extension 122. Information is also available on their website at www.westendnh.org/growdefund.
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