Need working capital? Tedco trying to push $1M loan fund
BYLINE: Stephanie Wentworth
The Maryland Technology Development Corp. wants to make it easier for companies to apply for its working capital loan program -- a $1 million funding pool that has been little used since its creation last year.
Only two loans totaling $90,000 have been financed since the fund was created. The quasi-public agency, known as Tedco, is restructuring the loan qualifications in hopes of sparking interest from more companies.
Tedco used to require companies to have an affiliation with one of the state's 17 technology incubators before applying for a loan worth $15,000 to $50,000. But that stipulation isolated some startups on the Eastern Shore, officials said.
The state's only incubator on the Eastern Shore is in Chestertown. Tedco relaxed the requirement this month to allow companies to work with any established economic development or entrepreneurial program instead of just incubators.
"Some companies on the Eastern Shore don't have access to an incubator," said Tedco Interim Executive Director Renée Winsky.
Baltimore's BA Systems received the first loan, worth $40,000, last May. The company used the money to test its software at an Amsterdam bookstore. Baltimore's Emerging Technology Center (ETC) incubator in Canton mentored the company.
ETC officials gave BA Systems business advice, came along on corporate meetings and helped create a business plan that included a repayment schedule for the Tedco loan, BA System's CEO Ayisat Herbert said.
"They answered questions about everything we weren't sure about," she said. "It's sort of like they were a backbone giving us support."
Many young tech entrepreneurs don't have a lot of business experience, Winsky said. The mentoring requirement is designed to make sure those startups stay on the right track -- but that kind of leadership doesn't have to come from an incubator, she added. An established business-savvy entrepreneur would be an acceptable mentor, Winsky said.
Tedco is reviewing proposals from 12 companies that have applied for the loan. The working capital loan is financed through Harvest Bank of Maryland with interest rates that are below market. The loans that were given out last year had interest rates less than 8 percent, officials said.
The working capital loan program began last year as a $500,000 loan fund for companies located in rural areas and in disadvantaged parts of Baltimore City. The state kicked in another $500,000 last June to open the program to startups throughout the state.