A City of Los Angeles program to provide $15 million in loans to small businesses to create jobs for low and moderate income residents has assisted only two companies in the nearly two years since the program started. Officials involved with the program said that many applicants failed to meet criteria to receive the money set by the city and the U.S. Department of Housing and Urban Development. Some businesses applying for loans were losing money and sought a cash infusion to keep themselves afloat, said Robert Sainz, assistant general for the Community Development. “We did not want to invest in high risk businesses,” Sainz said. VEDC President Roberto Barragan also said that loan applications were rejected because of inadequate collateral or ineligible use, such as for working capital. “All loan applications received were screened and had projected job creation,” Barragan said. The $15 million comes from a line of credit the city has with HUD which the VEDC than borrows from the city. The city contracted with the VEDC to provide the loans over a 20 year period. Powerline Control Systems Inc., of Northridge, a maker of energy-efficient lights, received $450,000. Universal Art Gallery Inc. in Venice received $260,000. The CDD received 88 total applications for the funds, Sainz said. Twenty of the applications were withdrawn or were not fully completed. The remaining 68 applications were rejected by for not meeting criteria or having a poor credit rating. But 12 out of those 68 businesses did receive loans from either banks or from another program administered by the VEDC, Sainz said. Additionally, the VEDC provided $1 million to four applicants through the Chase Small Business California program; and $5 million to 20 applicants provided by the U.S. Small business Administration, Wells Fargo, and California United Bank, Barragan said. An expanded version of this story will appear in Aug. 29 edition of the San Fernando Valley Business Journal.
City Program Falls Short in Loans to Small Businesses