State Loan Program Will Help Small Firms Fight Pollution : Environment: The funds will enable businesses to keep pace with air-quality rules.

For the past couple of years, Martin Rapkine has been shopping for a $30,000 to $50,000 loan to replace the equipment in his dry-cleaning store in Mission Hills with new machines that are more efficient and emit less pollution.

But no one has made him an offer that he can afford.

“Most lenders want pay-back in 36 months. Nobody will go six or seven years,” said the 52-year-old owner of Joy Cleaners. “And those that will,” he said, “they want to charge you more interest.”

But Rapkine’s search might be over. Under a new program, the state treasurer is making available $3 million in loan money to help small businesses in Southern California buy equipment that would reduce pollution emissions. The state could set aside as much as $30 million more if the pilot program succeeds, officials said.

The program, called California Loans for Environmental Assistance Now, or CLEAN, would provide loans ranging from $10,000 to $750,000 to qualified small businesses at competitive market rates. Program administrators expect the loans to carry a fixed interest rate of about 9%. The maximum term for these loans is seven years.

The CLEAN program comes as small businesses in Southern California face tougher environmental standards. State and federal regulators, which have long focused on big firms, recently have been requiring more from small businesses, said Paula Levy, a spokeswoman for the South Coast Air Quality Management District. The CLEAN program, Levy said, could help businesses comply with the district’s existing and upcoming regulations. “The timing is good,” she said.

While the loan terms are attractive, especially to small businesses with minimal cash flow, some business operators say the CLEAN program doesn’t go far enough. Others complain that the waiting period between applying and receiving the money--about four months--is too long.

Since the program was launched last month, few have actually applied. But at least 30 businesses in and around the San Fernando Valley, including Joy Cleaners, have expressed interest, said Jonathan Goldhill of the Valley Economic Development Center in Van Nuys, which is providing applications and assistance to businesses in this area.

The CLEAN program is especially intended to help businesses such as dry cleaners, metal platers, circuit board makers and furniture builders, some of which face new regulations. Dry cleaners using petroleum solvents, for instance, face new regulations next year. And many others that use chlorine-based cleaning systems are expected to face tougher standards in the next couple of years.

Jim Young, a small-business specialist with the state treasurer’s office, says the CLEAN program is ideal for small businesses because private lenders usually won’t make commercial loans for such small amounts. He added that others have shied away from loans to small firms that emit pollutants because of potential lender liability. The CLEAN program will run through next spring or until the money runs out.

To be eligible for a CLEAN loan, the applicant must have been in business for at least three years, with net income in at least two of the last three years of operation. The applicant must have adequate collateral, and the project to be funded must be in California.

Rapkine, whose cleaners has been in business for 19 years, said the CLEAN program could have gone further, given that small businesses face growing burdens to meet environmental regulations. “It’s on the low end of the market rate,” Rapkine said of the CLEAN loan. “But it’s the market rate.”

Still, he added, “Right now, it’s the most attractive thing around.”