Terrence Gidney moved his business, Affordable Scrubs & Stuff, to Main Place Mall a year ago, with financial help from a minority
business loan program.
"I'm still in business, and that says a lot in the middle of a recession," Gidney said. He sells designer and traditional scrubs for the health care industry, as well as medical accessories and chef coats.
Gidney received a $50,000 loan in 2008 from the Minority Entrepreneur Grant and Loan Program. It is run by the Regional Development Corp., the loan division of the Erie County Industrial Development Agency.
Gidney was one of 10 loan recipients in 2008. Now a new group of applicants are being considered for the $500,000 program.
Fifty-five applicants have made the first cut, and they will face tougher scrutiny of their ventures and finances. The program targets high-risk businesses being launched or expanded but that do not qualify for traditional bank financing.
Nine of the 10 recipients from 2008, including a gourmet catering firm, a bowling center and a day spa, are still operating and employing 23 people, according to the ECIDA. The one that failed, One Sunset restaurant run by Leonard Stokes, became a source of controversy.
For the current edition of the program, 89 applications were received by the mid-December deadline, and the field was whittled to 55, said Karen Fiala, the ECIDA's tax incentive product coordinator.
The 55 applicants that made the preliminary cut will have to submit a detailed analysis of how they would use the ECIDA funds, as well as business plans. The recipients will be announced in mid-March.
The applicants include minority businesses in Buffalo, East Aurora, Cheektowaga, Grand Island and Getzville, with ventures including construction, a day care, and a bookstore.
Only a handful of the 55 applicants might end up receiving loans, Fiala said. "We have to take a long, hard look. Does it make sense? Do they have a good plan? Do they have the experience?"
In 2008, the pilot program attracted 70 applicants and 28 made the preliminary cut. A loan committee approved loans for 11 of them, but one later withdrew. The 10 ventures were awarded about $400,000 in low-interest loans and grants.
Gidney said the loan he received through the ECIDA program helped him move his business from Elmwood Avenue to the mall location a year ago. The low interest rate and terms make it feasible for a small business such as his to pay back the loan as he tries to build his business, he said.
Gidney said he is trying to spread the word about his business into the suburbs. That would benefit downtown by bringing more customer traffic there, he said. But as a start-up, his resources are limited.
While Gidney's business forges on, the sole loan recipient from the 2008 program that has closed, One Sunset, drew criticism.
City Comptroller Andrew A. SanFilippo faulted the ECIDA for not performing its "due diligence" on One Sunset before approving that $50,000 loan. The agency defended its actions, saying it had made its decision based on the best information it had available at the time.
A Buffalo News investigation last year found the agency had overlooked public records showing an unpaid vendor won a court judgment against the restaurant before the loan was dispersed, and that two other businessmen had already sued the restaurant. One Sunset had also racked up $17,376 in unpaid sales taxes.
Current applicants to Minority Entrepreneur Grant and Loan Program can expect more-extensive reviews this time.
"We're expanding our due diligence this year to include a more intense credit check," Fiala said. That will include research into matters such as liens and judgments, she said.
The finalists will also be subject to another financial review within 30 days of receiving their funds. And program participants will have to complete an approved business "mentoring" program, to help them avoid potential mistakes in running their operations.
