Cited: LA DailyNews
Los Angeles has created a $15 million loan fund that is designed to help scores of LA companies expand as recession winds down providing a boost to those small businesses that have been hampered by tough economic times. The first recipient in the program, Powerline Control Systems in Northridge, will get $220,000 to expand its commercial and industrial business that manufactures lighting controls.
“Once this thing gets off the ground (and) depending on what the sales volume is, it will create jobs,” said Powerline CEO Marshall Lester, who founded the company in his garage 15 years ago. Lester is taking advantage of the Los Angeles Citywide Small Business Loan Program, which will be administered by the Van Nuys-based Valley Economic Development Center.
“Right now we’re in the midst of the most significant credit crunch we’ve seen since the 1970s,” said Roberto Barragan, the center’s president. “What this program does is recognize the fact that businesses are going through tough times.”
The fund is the brainchild of Barragan and Ninoos Benjamin, director of the Economic Development Division of the city’s Community Development Department, who began discussions last February.
“I said, `Look the city has not a citywide loan program since 2004,”‘ Barragan said Friday.
Benjamin concurred and assembled money for the loan pool, allocating some of the money the city receives from the U.S. Department of Housing and Urban Quantcast Development. The city has typically used these grants for construction projects.
“I credit a lot to Ninoos in making our request feasible because he knows the HUD rules and we don’t,” Barragan said.
Businesses that qualify can use the money to refinance debt; buy inventory, equipment or commercial real estate; as working capital; or for tenant improvements. With loan amounts ranging from $50,000 to $400,000, Barragan estimates as many as 60 companies will benefit.
And while HUD provisions require that one job be created for every $35,000 loaned out, Barragan hopes to add one job to the city work force for every $10,000 loaned.
Loan applications and terms are available on the center’s Web site at www.vedc.org. Barragan said that interested companies should first check the terms to determine if the program meets their needs.
The center will then do a free credit check to see whether a company should continue with the application process.
“You don’t have to have fantastic credit but we don’t want people who had a bankruptcy in the last three years or major collection actions because that would make it very difficult to get through our (application) process,” Barragan said.
Startup companies must show strong job creation potential and the owner must have a significant investment of his own money, he said.
Barragan also said that Lester’s Powerline was an excellent loan candidate.
“The company is a good, strong company. It has a real upside potential for jobs,” Barragan said. (Lester) is in a green type business and that’s what we’d like to see more money in.”
Lester said there is a lot of competition in the residential lighting control sector but he thinks he’s got a clear field on the commercial side.
“There is no competition (in commercial) because nobody can do what we do,” Lester said.
The loan money will be used to produce and market Powerline’s new, patented GreenWorx energy-efficient commercial lighting control system. Lester said the company will first focus on parking structures and then expand into buildings.
Powerline’s control system uses existing power lines to automatically control lights without the need for rewiring the facilities.
The latter is an expensive undertaking, Lester said, and the only other option to his company’s technology. GreenWorx systems reduce energy use and power costs, both important considerations to industrial and commercial businesses. Lester said his company should be ready for its big push at the end of next year’s first quarter.
In fact, a $220,000 deal is being installed at California State University, Northridge, which is the company founders’ alma mater. It is a six story parking structure. This is only one of a couple of systems that the company has already sold.
“That’s also kind of our giant testing laboratory,” Lester said.
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My Take: This does not make sense to me. I keep hearing how bad California is financially and Los Angeles can do this? Maybe the LA city mayor should take over the state? Maybe it is because LA is such a big passion town, who knows.
I know there are several T shirt design companies that are based in LA as well as cosmetics manufacturing companies. Maybe that is because of Hollywood. But you can definitely get any number of pop culture T shirts easily in Los Angeles. However, I do not think any the manufacturers of private label skin care products need to worry too much because most females think they need it.
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