Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 23, 1995 TAG: 9508230048
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE: LENGTH: Medium
"I've budgeted to go off food stamps," she said. That should happen soon after the Sept. 1 opening of what she will call Alicia's Ambiance Boutique to be run from a Salem mini-mall, she said.
She does not expect to need her $231 monthly welfare check, once she starts earning an income.
Szmaja (pronounced SMA-ja) is getting a lift out of poverty through her own efforts and help from a program for poor entrepreneurs.
Szmaja, a divorced woman with one child who lives in public housing, is among the first 27 graduates.
Tuesday, officials said admission to the program of classroom training and loans, which has been limited to those willing to attend a class in Roanoke or who intend to run a business in the city, is expanding to the Roanoke Valley and beyond.
The program began last September when Total Action Against Poverty, a Roanoke-based social services agency, at its own expense started training would-be business people at Center in the Square in downtown Roanoke. Virginia Tech developed the curriculum and local business people served as teachers and mentors.
As a component of the program, loans from a $20,000 fund established by the city were made available to spawn new businesses within the city limits.
Neither effort completely pleased TAP officials, because some interested people lacked a way to get to the class, and others, Szmaja included, aspired to do business outside the city of Roanoke.
Szmaja went outside the program for start-up funding, and her parents co-signed for an $8,500 business loan from a bank. Her shop, actually a rented cubicle inside the House of Collectibles antique mall in downtown Salem, is the culmination of a dream her friends and family had dismissed as an impossibility, she said.
Five area banks eased one of TAP's worries about the program this month by pledging to make business loans totaling $75,000 in the next year to low-income people or those who agree to hire low-income employees, as long as the start-up companies are in the Roanoke Valley, Alleghany Highlands or Craig County. The institutions are First Union National Bank of Virginia, Crestar Bank, First Virginia Bank Southwest, NationsBank and Signet Bank. Loans will be $5,000 to $7,000.
In addition, the state is furnishing $70,000 to enable TAP to stage the entrepreneurial classes in Covington and Botetourt or Craig counties. Classes are forming now, and are open to all regardless of income.
State officials awarded the money under the belief that skilled entrepreneurs "exist at all levels of the economy, but many have little or no access to business training and capital," said a statement from the Department of Housing and Community Development.
The banks consider their involvement a riskier type of business lending, as the borrowers can qualify despite having credit problems or little or no money to put down. As much as 5 percent of the loans may not be repaid, five times normal for business lending, but a portion of the state's $70,000 will cover losses, said Jane Henderson, community reinvestment manager for First Union in Roanoke.
Henderson said she prefers to turn the notion of losses on its head by realizing that the loan program can lose the amount of money expected and still accomplish a lot.
"What social program can boast of a 95 percent success rate?'' Henderson said.
John Jennings, executive director of the Blue Ridge Small Business Development Center in Roanoke, said the TAP program can deliver the kind of intensive and basic assistance needed by low-income people seeking business ownership.
"They need a lot of nurturing because they are disadvantaged. That's what this program provides," Jennings said. And, "even if the participants don't ultimately get to own a business, they learn a whole lot."
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