THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, June 19, 1996 TAG: 9606190374
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: 54 lines
After a wrenching downturn in orders from Newport News Shipbuilding and other defense contractors, Priest Electronics Inc. shifted some of its sales efforts to television broadcasters and commercial users of fiber-optic cable.
``We're doing half the business we once did with a third the people,'' said Fenton F. Priest III, president of the Norfolk-based supplier of switches, cables and electronic equipment.
``During the buildup of the 600-ship Navy in the 1980s, more than 60 percent of our sales were defense-related. Last year, they were 40 percent.''
On Tuesday, Priest Electronics received a $300,000 government-guaranteed loan to finance its pursuit of new markets.
The loan was part of the Defense Loan and Technical Assistance Program, a joint effort by the Small Business Administration and the Defense Department to assist small companies that have suffered from cutbacks in military spending.
The loan, provided by Virginia Beach-based Commerce Bank, was the first of its kind in the SBA's six-state middle-Atlantic region, said Susan McCann, the SBA's regional administrator.
Elsewhere in the country, banks participating in the SBA-Defense Department program have lent $24 million to 51 businesses. The loan program, dubbed Delta, was launched in November.
Under the program, a small business can borrow as much as $1.25 million from a participating lender. To qualify, a company must have depended on defense contracts for a substantial percentage of its annual sales. It must use the funds to meet at least one of three objectives of the loan program:
Retain workers who would otherwise lose their jobs.
Create additional jobs.
Modernize or expand its facilities.
Priest Electronics, which evolved from a small radio-parts and repair shop started in 1947, has 10 employees, compared with almost 30 in the mid-1980s, Priest said. The company, he said, recently added one salesperson to its work force and expects to hire at least one more employee before year's end.
The Delta program involves more work and greater risk for participating banks than the SBA's conventional loan programs, said McCann, the regional administrator. That's because the eligible firms are entering new, less familiar lines of business instead of expanding existing lines of businesses, she said. The Defense Department provided $30 million in reserves for the program, which is enough to support $1 billion in loans, McCann said. The SBA will guarantee 75 percent of the amount that a bank lends in a Delta loan. MEMO: Information about the SBA's Delta loan program is available
from participating banks and from Y.C. Kent in the finance division of
the SBA's Richmond district office. Kent can be reached at 804-771-2400,
Ext. 150. by CNB