Brown Kicks Off Small-Business Loan Program

Kathleen Brown put on two hats Friday, as the state’s treasurer and a Democratic candidate for governor, to kick off a new government program for small businesses that helps fulfill her campaign pledge to create 1 million new jobs.

The goal of the California Capital Access Program is partly to help fledgling companies get an early boost by making small-business loans easier to obtain. Brown launched the program Friday at a booming 2-year-old manufacturing company that was having cash-flow problems and being courted by other states for relocation.

“I am on a mission to create 1 million new jobs,” Brown said in the warehouse of Timberline Gas Logs Co., maker of simulated logs for gas fireplaces. “By providing access to affordable loans, Cal-CAP will help many small businesses like Timberline get the dollars needed to expand, invest in research and equipment and hire workers.”

Brown’s appearance was actually a ribbon-cutting ceremony for a program that she already broadcast in a news conference in January and was unveiled in legislation signed in October by her Republican rival, Gov. Pete Wilson.

The significance of Friday’s event was to recognize the award of the first Cal-CAP assisted loan to Timberline--for $500,000--and for Brown to underscore her pledge to create 1 million California jobs by 1998.

The jobs pledge was part of a new focus that Brown’s campaign introduced at last weekend’s state Democratic convention, along with a new team of strategists and staff. Since the announcement, however, the idea has been sharply criticized as a campaign gimmick by Wilson and the other Democratic candidates--state Insurance Commissioner John Garamendi and state Sen. Tom Hayden (D-Los Angeles).

Brown’s opponents noted that economists have already predicted that the state’s economy should create 1 million jobs over the next four years no matter who is governor. Larry Kimbell, director of the UCLA Business Forecasting Project, said Friday that his department’s most recent study actually calls for 1.2 million new jobs in California by 1998.

Brown responded to her critics Friday: “If you look back, the economic forecasts in 1990, 1991 said there would be 170,000 jobs created. California, in fact, lost double that number. So economists make forecasts just like weathermen, weather people, make forecasts.”

Dan Schnur, spokesman for the governor, and Elena Stern, spokeswoman for Garamendi’s campaign, ridiculed the idea that Brown was taking credit for 1 million jobs that are already expected.

“Her campaign slogan might as well be, ‘Vote for me and I will stay out of the way,’ ” Schnur said.

At the Timberline Co. on Friday, President Jeff Straubel said the loan provided by the Cal-CAP program will help the company add about 30 employees to its 100-member work force. He described the payment as a godsend. “It is going to allow us to ship our products on time,” he said.

Under the Cal-CAP program, the loan is provided by a bank, but it is partially insured by money from a state reserve fund. The reserve fund includes state money acquired through corporate fees as well as contributions from the borrower and the lender.

Michael K. Gallagher, a Wells Fargo Bank officer at the news conference Friday, said Timberline did not qualify under the bank’s usual lending standards because it is too young. With Cal-CAP assistance, however, Gallagher said the bank’s lending standards have been lowered, allowing the loan.

“This is the kind of public-private partnerships we can develop to restore the California promise of good, decent-paying jobs,” Brown said.

The legislation was initiated last year by the California Bankers Assn. based on similar models operating in four other states. Brown campaign officials said the candidate played a major role in support for the legislation and her office oversees the state money that operates the program.

Brown said the state has provided an initial $1 million for the program, which is expected to leverage about $20 million.

Nathan Brostrom, an aide in the treasurer’s office, said the program has been operating since 1986 in Michigan, where 2,700 loans have provided a total of $120 million.