ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, February 25, 1996 TAG: 9602270011
SECTION: CURRENT PAGE: NRV-3 EDITION: NEW RIVER VALLEY
DATELINE: BLACKSBURG
SOURCE: ELISSA MILENKY STAFF WRITER
When Thomas Piccariello started his contract research company earlier this month, he knew he had the basics: office space in the Virginia Tech Corporate Research Center, two full-time consultants and a general business plan.
Like many budding entrepreneurs, however, Piccariello needs a small loan to get his business off the ground. But he is not looking to a bank or a venture capital firm for money to buy equipment.
Instead, Piccariello is working with the New Enterprises Fund, a nonprofit community development corporation created to direct small loans to new business owners in the New River Valley. It operates out of an office in the Virginia Tech Corporate Research Center.
The fund has gathered $650,000 from local banks, local investors and the state to use for loans. First Union committed $250,000 to the fund, while the National Bank of Blacksburg and First National Bank in Christiansburg each donated $75,000. About $80,000 has been collected from individuals.
The fund also recently received a $170,000 grant from the state's Department of Housing and Community Development.
Entrepreneurs starting up businesses can borrow from the fund in loans of $5,000 to $25,000 for one to four years.
Tom Little, the fund's executive director who has himself founded five technology-based companies, said the goal is to provide loans to entrepreneurs who otherwise could not get bank loans.
The U.S. Small Business Administration estimates about 40 percent of start-up companies fail.
"As these companies try to get going, there's no money for them," said Little.
Getting a loan is not easy. The fund, about 7 months old, has not yet awarded a loan, but Little is working with three beginning entrepreneurs. The business owners must first have a solid business plan, and in some cases take a preparatory course, before they can get a loan - a process that can take several months.
The New Enterprises Fund is a spinoff of Christiansburg-based Virginia Mountain Housing, a nonprofit organization that provides affordable housing. The fund takes Virginia Mountain Housing a step further, officials said.
"We can put them in a house, but unless we find them a job, they won't be able to stay in that house," said Jane Henderson, First Union bank's senior vice president for community reinvestment.
"The real growth in job development has been entrepreneurship and small business." added Henderson, who served on the housing agency's board and is now on the New Enterprises board of directors. Other board members range from a local bank president to the head of a local poverty agency.
The creation of nonprofit loan companies was encouraged by 1993 tax legislation, which awards federal tax credits to individuals and corporations that make cash gifts toward local economic development. Virginia Mountain Housing received a special designation from the Internal Revenue Service to offer such credits, which prompted the establishment of the New Enterprises Fund.
Companies that can qualify for these loans include everything from Piccariello's consulting firm in the Corporate Research Center to a franchise or a crafts shop, Little said. These small businesses, he added, are what create the most jobs.
Little includes data from a recent study of employment expectation, which was conducted by a brokerage firm, with the fund's literature. Companies with fewer than 100 employees, the study says, will create about 66 percent of the new jobs.
"Most of [the small companies] could have grown faster if they had access to more money," he said.
How to qualify ...
To qualify for a loan from the New Enterprises Fund you must have:
* A business plan with financial projections
* Equity equal to at least 10 percent of the loan
* A location in the New River Valley
* Established personal credit risk
* Experience or training in small business management
For more information on the fund, call 231-5082.
LENGTH: Medium: 83 lines ILLUSTRATION: PHOTO: Alan Kim. Tom Little, in his office at Tech's Corporateby CNBResearch Center, is executive director of the New Enterprises Fund.
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