Program to Offer $126 Million in Business Loans

A public-private partnership committed to providing $126.5 million in loans to small businesses in the San Fernando Valley was announced by Mayor Riordan and other city officials Wednesday.

Flanked by Councilmen Richard Alarcon and Michael Feuer and state Sen. Herschel Rosenthal (D-Los Angeles), Riordan hailed the Valley Business Lending Partnership as a major step in the resurgence of the Valley economy and a means of generating thousands of new jobs.

“The Valley has come a long way, particularly for small businesses,” Riordan said.

The loan fund “means more jobs. . .jobs that are necessary to turn our city around.”

The program will be administered by the Valley Economic Development Center, a nonprofit agency that uses federal grant money to assist small businesses with free consulting and training services, grants and loans.

The new loans will be made by 16 local banks that have agreed to participate in the program and the VEDC. No city or state funds are committed to the partnership, but various government agencies will provide guarantees on the loans.

VEDC President John Rooney predicted the loan program would help create or save up to 17,000 jobs in the Valley over the next three or four years.

Rooney said that small- and medium-sized businesses with sales under about $50 million will be considered for partnership-sponsored loans. Those approved for funding will generally consist of companies that are considered to be good credit risks, but which fall into a “gray area” of not meeting all the usual underwriting standards adhered to by traditional lenders, he said.

The announcement was made at the future site of Leaders Centro del Hogar furniture store on Van Nuys Boulevard, recipient of the partnership’s first loan. The building was vacated by ITT Corp. after it was severely damaged in the 1994 Northridge earthquake.

Alex and Mirta Liberman, the owners of Leaders, have operated another furniture store in San Fernando since 1985. They wanted to expand, but were turned down for a Small Business Administration loan, and couldn’t find other sources of capital.

“We were falling through the cracks,” said Alex Liberman.

Now, with the $1.7 million in loans they received from the VEDC and Coast Federal Bank, one of the banks involved in the new lending partnership, the Libermans plan to open their second store in the renovated building on Thanksgiving Day and eventually hire 40 new workers.

Among the other banks participating in the partnership are American Pacific State Bank, California United Bank, City National Bank and TransWorld Bank.

Feuer and Alarcon, praising the partnership as the type of innovative solution needed to revitalize the regional economy, said they also plan to propose in a few weeks the creation of an economic assistance center to facilitate funding and technical support for small businesses in the Valley.

They intend to apply for federal funds to open three sites for the center, in Sherman Oaks, Pacoima and Northridge, through which companies can apply for loans from the new partnership.

“We are optimistic that will be funded in January,” Feuer said.