The Erie County Industrial Development Agency is expanding its program that offers low-interest loans to minority-owned businesses.

The IDA, through its Regional Development Corp. affiliate, is adding $500,000 to its Minority Entrepreneurs Grant and Loan program, more than doubling the amount of funding for the initiative, which was launched last year.

Agency officials said the program has been a success, with nine of the 10 loans made in the previous round now in the process of being repaid and 23 new jobs being added by those recipients.

But the one loan that went bad—to the parent company of the former One Sunset nightclub and restaurant operated by former Canisius College basketball player Leonard Stokes — has been a source of controversy over allegations that the agency skirted its loan process to channel public money to One Sunset and its parent firm, Candles Culinary & Hospitality Group. IDA officials have said they followed the proper screening procedures.

“In spite of the controversy one of those loans engendered, the fact of the matter is that nine out of 10 of those loans were successful,” said Philip Ackerman, the IDA’s chairman. “Where I went to school, 90 percent was an ‘A.’ ”

Loans to start-up firms are inherently risky, with more than half of all small businesses failing within four years, but IDA officials said the program fills an important void by providing financing to firms that normally wouldn’t qualify for bank financing.

“This is a tremendous investment,” said Brenda Williams McDuffie, president and chief executive officer of the Buffalo Urban League. “You know the success ratio of small business is not 90 percent.”

Maria Kahn, the owner of Tastings, a Buffalo restaurant and catering business, said the $50,000 loan her company received through the program has helped her business grow by 75 percent since last fall.

Kahn used the proceeds to remodel kitchen space at Tasting’s facility at 1585 Elmwood Ave. The company also began running the Tastings Cafe at the nearby Burchfield Penney Art Center in September.

Another loan recipient, Dan Adams, the owner of Kerns Avenue Bowling Center at 163 Kerns Ave., said he used a $40,000 loan to install a kitchen at the bowling lanes, allowing him to offer party packages for birthdays and other events.

The terms of the loans, which allow for interest-only payments in the first three years of the 10-year loans, also give a business owner room to make mistakes without putting the company over the financial edge, he said.

IDA officials said demand for the minority loan program was strong last year, with more than 70 companies applying for the financing.

With the latest round of funding, applicants and anyone guaranteeing the loans will undergo a credit screening, as well as a final review within 30 days after the funds are disbursed. The businesses also must complete an approved “mentoring” program.

The deadline for submitting applications to the IDA’s loan division is Dec. 15, with finalists required to prepare full applications by Jan. 31. The loan recipients are expected to be announced in mid-March. Information and application forms are available at the IDA’s Web site at

www.ecidany.com

.