Small business loan increases amended, advanced

More funds would be available for small business development in Nebraska under a bill amended and advanced from general file April 9.

Introduced by Omaha Sen. Heath Mello, LB449 would increase the maximum amount of microloan funds from $1 million to $2 million that could be awarded annually by the state Department of Economic Development (DED). The department would be required to increase from $500,000 to $1 million the minimum amount it awards each year.

A microloan is financial assistance designed specifically for a microenterprise, which, under the 2011 Business Innovation Act, is defined as a for-profit business with up to 10 full-time employees.

As introduced, the bill also would require that 50 percent of microloan funds be used for loans not to exceed $100,000 and 50 percent of the loans be used for small business technical assistance. Currently, 70 percent of the loans distributed must not exceed $50,000 and 30 percent of the loans must be used for small business technical assistance.

Since the loan program began, Mello said, the DED has awarded 409 microloans totaling $5.3 million. The program has helped entrepreneurs bridge the gap between dreams and reality for small business ownership, he said.

“We have a small business initiative that works,” Mello said. “When you find something that works, you should do more of it.”

An Appropriations Committee amendment, adopted 31-0, incorporated provisions of two other bills.

Provisions of LB569, introduced by Bancroft Sen. Lydia Brasch, would increase from $1 million to $4 million the maximum amount the department may award annually through matching federal grant programs for:
• small business planning;
• agriculture enterprise development;
• companies or individuals wanting to market a product prototype or process;
• companies using Nebraska public or private colleges or university faculty and facilities for new product research and development; and
• companies or individuals seeking to create a product prototype developed in a Nebraska business, public or private college or university, in which case the grant limit would be raised from $50,000 to $150,000 per project.

Documents used by the department in administering the grants would be deemed confidential under the amendment.

Provisions of LB450, also introduced by Mello, would require the state Tourism Commission to expand the use of tourism promotion funds for marketing assistance grants to communities and organizations.

The commission would be required to develop a marketing grant program specifically for communities and organizations hosting events that have the potential to attract large numbers of out-of-state visitors. The commission director would be required to form a committee to review grant applications. Grant applicants would submit a marketing plan for their events and recipients would file a final report regarding attendance, fund use and marketing impact within 90 days of event completion.

Other provisions of LB450 would create a fund for use by the commission to defray conference expenses and would require any state agency operating a grant program to encourage tourism to consult the commission in its grant review process.

The amendment also would remove the requirement that 50 percent of microloans be disbursed in loans not exceeding $100,000.

Mello said the amendment would allow the DED to have more flexibility in deciding how to most efficiently appropriate small business loans.

Brasch supported the bill and amendment, saying the program has had proven success in both rural and urban communities.

“This is how we grow Nebraska,” she said.

Lawmakers advanced the bill on a 33-0 vote.