Lawrence chamber’s small-business loan program will be able to double lending

The Lawrence chamber of commerce will soon be able to provide more financial assistance to small businesses.

The chamber on Wednesday announced that NetWork Kansas, a nonprofit organization focused on business growth, promoted the chamber’s small-business loan program Metropolitan E-Community Program, or MECP, to Tier One status beginning on July 1. The promotion will allow the Lawrence chamber to loan up to $200,000 to local businesses each year. Currently, the program is a Tier Two program, which allows up to $100,000 in loans.

Adam Handshy, programs and business development director for the chamber, said the Lawrence program was promoted because of the success of the first six loans it has administered since the beginning of the program in 2017. Some local businesses that have benefited from the program include restaurants Luckyberry and Leeway Franks.

“It’s based on having loans that are still in good standing and success rate of loans,” Handshy said of the reasoning behind the promotion. “We haven’t had any that have defaulted or been behind on their payments thus far.”

Through the program, the Lawrence chamber offers “gap loans” to small businesses. Handshy said gap loans were meant to help those businesses seal overall business loans that likely would not have been completed otherwise.

He said an example would be a business that needed a $100,000 loan but could only make a $10,000 down payment and could not offer any collateral. A bank likely would not approve the $90,000 of lending risk. But banks may take the offer and take on a portion of the lending risk, such as $75,000. The MECP then comes in and offers a second business gap loan of $15,000 to make up the difference.

“We can almost always find a way to make it happen,” Handshy said.

To qualify for the chamber’s loan program, local businesses must meet at least one of five criteria. According to a chamber brochure, the criteria include the business operating in a distressed area; the business is at least 51% owned by a woman, minority or another “disadvantaged entity”; the business’s products or services support disadvantaged or underserved populations; the business employs or will employ low-income employees; and the business mission supports underserved populations.

The chamber administers the loan program on behalf of NetWork Kansas, which generates the funds through state tax credits.

Through state legislation, $2 million of state tax credits each year are allocated to NetWork Kansas, which then “sells” the tax credits to wealthy Kansas individuals with high tax liabilities. The law allows Kansans to donate a certain amount of money to receive a tax credit worth 75% of the donation. In the past the law set the tax credit allowance ceiling at $50,000, which would require about a $66,000 donation. Earlier this year, the Kansas Legislature amended the law to allow for financial institutions to also participate in the purchase of the tax credits and raised the tax credit ceiling from $50,000 to $100,000, which would require about a $132,000 donation.

NetWork Kansas then uses the generated funds to support its loan programs, including the Lawrence MECP, to help grow Kansas businesses in underserved areas.

“It’s really a feel-good program,” Handshy said. “It’s proven successful … There’s obviously a demand for small business growth in Lawrence.”

Contact Dylan Lysen

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