Gov. Dannel P. Malloy proclaimed that his “Small Business Express Program” was a success and that the closure rate of businesses that receive the low-interest loans is much smaller than small businesses that don’t receive assistance.
“Four businesses out of 652 is a fraction of the closure rate of small businesses in general,” Malloy said Thursday after an unrelated Capitol event.
The Department of Economic and Community Development said Thursday that 704 small businesses have received about $93.4 million in assistance from the state and only four have gone out of business. The bonding for those loans was approved in 2011 as part of a bipartisan jobs bill.
“As you can see we have about a 99.4 percent success rate thus far,” Jim Watson, a DECD spokesman, said.
An information and technology consulting firm from Old Greenwich, a recycling company in Killingworth, a deli in West Hartford, and a security company in Berlin are the four that have gone out of business since receiving loans from the state.
Mandragore LLC of Old Greenwich received a $250,000 incentive loan to retain two and hire five more people to expand their software platform. The West Hartford Deli received $47,500, APC Recycling of Killingworth received a $100,000 incentive loan and a $100,000 grant, and Serenity Security of Berlin received a $30,000 grant.
“There is a contract with each company that includes default and penalty provisions,” Watson said. “The department is currently reviewing these matters and will be pursuing any available remedies.”
House Minority Leader Lawrence Cafero said he thinks that on balance the Small Business Express Program has been more beneficial for employees and businesses in the state than the “First Five” program, which gives larger loans and grants to companies that promise to create more than 200 jobs.
All the businesses in the Small Business Express Program have 50 or fewer employees and the promise of job creation isn’t necessary in order to receive state funding.
Considering the four failures, Cafero said the state should look to see if it can establish more safeguards in the vetting process.
“I think on balance it’s a very good idea,” Cafero said.
Malloy is seeking legislative approval for another $100 million for the program over the next two years as part of his capital budget.
