Loan Keeps Dry Cleaner From Taking a Bath : Environment: State treasurer delivers $168,170 check in program to help small businesses buy required anti-pollution equipment.

Like many small businesses, Brownie’s Suede & Leather Cleaners found itself in the throes of a knotty Catch-22: It could go broke buying new anti-pollution equipment or eventually face fines for ignoring tougher environmental laws.

But the family-owned Brownie’s was saved from either catastrophe Monday when it became the first small business in the nation to receive a low-interest loan to buy anti-pollution equipment.

“California is offering a financial helping hand in a way that not only helps small businesses, but affirms our commitment to the environment,” said State Treasurer Kathleen Brown after she presented the company’s owners with a check for $168,170.

She said the new program, California Loans for Environmental Assistance Now, or CLEAN, is designed to help small companies survive the added costs of complying with the growing number of regulations by lending money for anti-pollution equipment. The money for the loans comes from a pool of fines paid by polluters caught by the government.

So far, $1 million has been earmarked for the program--the first of its kind in the nation--but Brown said that amount could go to $3 million.

The loan made Brownie’s almost odor-free and its owner, Dean Dungey, happy.

“If you noticed when you came into the shop this morning, there was no odor in the air,” Dungey said. “You might have smelled leather, but that’s all you smelled.”

Amid the racks of the Huntington Beach dry-cleaning operation, Brown said that places like Brownie’s are “the businesses hardest hit” by pollution regulations. Many of them, she said, have difficulty obtaining loans.

She explained at the press conference that the loan program is aimed at helping such hard-hit companies as dry cleaners, barbecue restaurants, metal platers, furniture manufacturers and circuit-board makers.

The program could help curb an exodus from Southern California by manufacturers who would rather move to other states than face more stringent air pollution controls.

For Brownie’s, a 20-year-old company with 14 employees that handles special dry-cleaning jobs for neighborhood cleaning stores, the low-cost loan means that it not only will meet air pollution regulations but will also save money.

Roger Smith, Dungey’s son-in-law and a partner in the firm, said the loan was used to finance three new dry-cleaning machines that take hazardous cleaning solvents out of garments before the solvents have a chance to evaporate.

Under the old system, garments soaked with cleaning solvents went directly from a washer to an open-air area to dry. In addition, the washer required filters to strain the solvents, and the filters were expensive to buy and maintain.

But Smith said the new machines can save Brownie’s money because they don’t require filters or the 10 hours a week in manpower needed to replace the filters. And the company can reuse the cleaning fluid that the machines recover.

The loans allow businesses to say, “I’m not only going to obey the law, but make money in the process,” Brown said.

The interest rate for Brownie’s loan is 8.75%, which the state treasurer said is five percentage points below the rate commonly charged for commercial loans to small businesses for financing the purchase of anti-pollution equipment.

The program was developed by a state pollution financing board chaired by Brown. The state Department of Commerce administers the program and the South Coast Air Quality Management District guarantees the loans.