RIEDC Announces New Finance Program to Assist Rhode Island Growth Companies
February 26, 2008 | Print this page | Share This | Email this page
Proposed legislation to establish a $20 million Growth Capital Guarantee Program will create new high-wage job opportunities for Rhode Islanders
The Rhode Island Economic Development Corporation (RIEDC) announced legislation sponsored by House Majority Leader Gordon Fox and Senator William Walaska, Chairman, Senate Corporations Committee that seeks to increase available growth capital for Rhode Island companies well positioned to grow and create new high-wage jobs.
The legislation will reposition existing guarantee authority currently in the Rhode Island Industrial-Recreational Building Authority (IRBA) program to create a Growth Capital Guarantee Program. Guarantees under the new program will assist companies in obtaining growth capital from private sector lenders for assets other than real estate, machinery, and equipment.
IRBA currently has $80 million in guarantee authority consistent with legislation passed in 1958. $63.6 million of this authority is not currently committed. IRBA will reduce its guarantee authority from $80 million to $50 million reducing the State's contingent liability by $30 million. A new authority would be created via a Kushner approval for a $20-million Growth Capital Guarantee Program. The state's overall contingent liability will be decreased by $10 million. While IRBA was originally established to address machinery, equipment and real estate needs of companies, Rhode Island's high-wage knowledge-based companies have 21st century assets that are typically centered in working capital and intangibles, such as patents, proprietary processes, software, systems, trademarks, copyrights, and licenses.
"This is an important time for Rhode Island. We are at a tipping point and must confidently move forward with a common vision and actionable plan for creating a stronger economy," says Governor Carcieri. "We have to update our financing programs to better meet the needs of Rhode Island's growth companies. This Growth Capital Guarantee Program will help create better jobs for Rhode Islanders"
"Companies ready to grow in Rhode Island often face difficulties accessing the capital they need to expand and create new jobs," says RIEDC executive director Saul Kaplan. "Most of the state's existing loan products are traditional asset-based loans and are not available to growth companies with non-conventional balance sheets. Today's high wage businesses will be better served with working capital support particularly where job and revenue growth will come from intangible and non-conventional assets such as patents, proprietary processes, brands and licenses. This Growth Capital Guarantee Program will enable growth in high-wage sectors where Rhode Island has a strong position to create more good jobs."
"Increasing the availability of growth capital to Rhode Island businesses is one of the key strategies the RIEDC is pursing as part of its economic growth plan, says Kaplan. The goal of the plan is to provide Rhode Islanders with more high-wage job opportunities by increasing the percentage of Rhode Island jobs paying above the national average wage from 40 to 60 percent."
The legislation will be introduced into the Senate by Senator William Walaska, Chairman, Senate Corporations Committee. "We are proud to support this important component of RIEDC's economic growth plan," says Walaska. "It is critical that Rhode Island move quickly to update its financial tools to reflect today's business needs. Our economic prosperity depends on our ability to respond to changes in the market place and to make sure that our economic development toolkit remains aligned with our strategy for high wage job creation."
House Majority Leader Gordon Fox will introduce parallel legislation to create the Growth Capital Guarantee Program into the House of Representatives. "There are things we know we can do better to support high-wage industries and create better jobs for Rhode Islanders. Improving our finance programs is one of them," says Fox. "The Rhode Island market place struggles to provide growth capital to knowledge economy companies poised for growth. This new program will help close the financing gap. Repositioning the IRBA program creates an opportunity to better support business and reduces the state's total liability — it's a win-win situation for the state and for business."
