Mo. small business loan program takes first step

Gov. Jay Nixon's plan to provide loans to small businesses took a step forward Tuesday despite some concerns about whether a state finance board could afford it.

The Missouri Development Finance Board voted to seek proposals from private-sector groups to administer the loans while simultaneously studying how the plan would affect the board's own finances.
Nixon's proposal would use $2 million from the finance board to establish a loan pool that could provide up to $25,000 each to businesses with five employees or fewer.

Since Nixon took office in January, more than 230 businesses have responded to an online survey expressing interest in the loan program. Demand is expected to far exceed the supply of money, said Department of Economic Development Director Linda Martinez, meaning the state could have to use a lottery system to decide which of the qualified businesses receive the money.

Martinez was presiding over her first meeting Tuesday as chairwoman of the finance board.

Republican Lt. Gov. Peter Kinder had led the board under former Republican Gov. Matt Blunt. But Nixon, a Democrat, named Martinez to replace Kinder as chairman earlier this month. Kinder remains a member of the board.

The state finance board gets part of its revenues by charging a 4 percent fee to its tax credit recipients. But Kinder said Tuesday those fee revenues may not be a sure thing.
http://www.forbes.com/feeds/ap/2009/03/24/ap6207205.html