An affiliate of the Erie County Industrial Development Agency is forming a new loan fund that could provide financing for local businesses that have been hurt by disasters that occur elsewhere.
The idea for the loan fund, which was approved on Monday on a one-year trial basis, was the aftermath of Hurricane Sandy, which disrupted the relationships that many Erie County businesses have with suppliers and customers in the hard-hit New York City, New Jersey and Connecticut areas.
While businesses in declared disaster areas are eligible for disaster relief loans through the U.S. Small Business Administration, local companies that were hurt by the ripple effects from the disruption the storm caused to businesses in that area are not eligible for disaster aid because the storm did not cause extensive damage here.
But the economic damage still can be painful for local companies, which is why the Buffalo and Erie county Regional Development Corp. is setting aside up to $2 million for a loan fund that can be used to provide financing to companies that have been harmed by declared disasters, both here and elsewhere.
“We were concerned about how it would affect our companies,” said Deputy County Executive Richard Tobe.
The agency launched the loan fund on an experimental basis through the end of next year. At that point, the agency’s board will evaluate how effective the loan program has been and make a decision on whether it should be extended. Over the past 19 years, the agency has launched 10 different experimental loan plans, with three eventually becoming part of the RDC’s standard loan offerings and the rest being dropped.
The disaster relief fund can offer loans of up to five years to businesses that have been in operation for at least two years. The loans can range in size from $5,000 to $250,000.
“I don’t know how much this is going to be used, but it can’t hurt to have it as a stand-by authority,” said John J. LaFalce, the agency’s chairman.
In the future, the fund also could be tapped for declared disaster situations within Erie County.
“Today, it’s New York City, Connecticut and New Jersey. Tomorrow, it could be a snowstorm in Buffalo,” said Alfred Culliton, the IDA’s chief operating officer.