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Sirti Bestows Award of Honor
October 21, 2010. Billie Moreland, PhD, of Billie Moreland and Associates and Steve Simmons, PhD, E...

Triangle %u201CGraduates%u201D at Sweet Sixteen
The Idea (1994)
In June 1994, while on a layover in the San Francisco airport, Dr. Steve Simmons cam...

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12/31/2007 - Business Development Corporation Funds Startups

Business Development Corporation (BDC) of Eastern Washington is the only organization of its type licensed by the state Department of Financial Institutions, according to David Lisaius, President and CEO. BDC, a for-profit institution, is a financial institution that awards commercial loans to start-up businesses, early-stage businesses, and expanding businesses. Although BDC is licensed for business statewide, they work with only businesses located east of the Cascades.

BDC was chartered in 2006, and opened its doors the second quarter of that year. Fred Schunter, founder of the Inland Northwest Bank, was the driving force behind the current incarnation of the BDC after the organization had lain fallow since around 1983. The BDC was re-licensed, reorganized, and recapitalized with ten member banks – mostly community banks – who committed to loan money through the BDC. Other local businesses became shareholders in order to boost economic development in Eastern Washington. The BDC is located in the Hutton Building at South 9 Washington.

BDC commercial loans go to both technology and other emerging or expanding businesses. These are term loans for up to 5 years. They also grant lines of credit for one-year terms. Pricing is variable and is asset based – interest is prime plus a factor that includes profit and credit risk. Then there are the loan fees which include closing costs, attorney fees, filing fees, etc. The BDC looks for collateral that could be both personal assets and company assets. If resources are limited, they might ask for an additional guarantor for a high-risk situation. “The requirements are unique to each transaction,” says Lisaius. “We listen to the company’s plan, and then we can be flexible and tailor the loans to the applicant and the industry in which they are operating. There is no business that we won’t consider, and genuine start-ups are welcome.”

To be considered for a loan, a business must submit a detailed business plan. It need not be fancy, but it does have to be a real, doable plan. The business must have a management team that can pull off the plan, and it must be licensed and located east of the Cascades in Washington State. The plan must include the financial Pro-formas, a profit and loss statement, a cash flow statement, and a balance sheet. The financial analysis must be projected for at least three years. Available loans are $50,000 minimum to a maximum of $250,000 – except for technology companies.

For technology companies, the BDC works with Sirti which has a federal grant and matching funds for BDC loans. The BDC manages and administers the Sirti portfolio. Sirti assesses the technology, determines whether it is marketable, at what price, and verifies the pro-formas. Sirti issues a report on the technology analysis, about any Intellectual Property, whether it is defensible, and its value. Sirti also assesses any equipment needed or owned, and its cost and possible secondary uses. BDC does the credit analysis, underwriting analysis, underwrites the loan, and looks at the financial statements. They then structure the loan and do all of the paperwork. The doubly researched package is then sent to the loan committee for approval. When both the BDC and Sirti approve, the BDC issues the commitment to the borrower and services the loan to maturity. “This is a very good arrangement for the community,” says Lisaius.

The BDC doesn’t do real estate loans, and they avoid enterprises using diminishing resources, e.g. logging, and retail food enterprises. Currently, they are looking at such diverse enterprises as bio-tech manufacturing, custom cabinetry, wireless broadband provider, bio-diesel, brewery, personnel recruiting, and Web page design. “We have funds available, and we want to make loans, says Lisaius. “We’re in business, we have money to loan for early stage and start-ups – so come and see us.”

For more information about Business Development Corporation of Eastern Washington, visit www.bdcofew.com. Call Dave Lisaius at (509) 747-1800 or e-mail dal@bdcofew.com.

Billie Moreland
 
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