SALEM, Ohio (WKBN) – Mahoning Valley small businesses have received $328 million in government-backed loans, and the majority of those loans have been paid back.
The government will guarantee at least half of every loan given through the Small Business Administration. If a company fails, the government steps in and pays the bank. That way, banks are more likely to give loans to new companies.
“It gets them very comfortable with the loan, and it helps the borrower by reducing their required equity injection,” said Terry Louk with the Mahoning Valley Economic Development Corporation.
In the Mahoning Valley, small businesses have a good track record, with less than 10 percent of their loans failing.
Over the last 10 years, the federal government has had to pay off about $10 million in bad business debt, with more than 2,000 companies in the Mahoning Valley receiving loans through the SBA.
Many of those businesses that did close have been restaurants, like West Fork Roadhouse in Youngstown and Charley’s Grilled Subs in Liberty.
Scott Dodds, executive vice president at Consumers National Bank, said there are some challenges new companies just can’t overcome.
“Most small businesses fail because they do not have access to startup capital. A lot of good ideas go by the wayside because people can’t get startup money,” Dodds said.
Some communities have programs to help small businesses find startup money. Salem is a hot spot for small business loans.
Over the past 10 years, 103 Salem companies have been started with the help of SBA loans. More have been issued than in many bigger cities.
Boardman, Canfield, Poland, Hermitage and Niles all had fewer loans granted than Salem.
“We’ve had a really good success rate. I think again it’s the community really standing behind these entrepreneurs,” said Michael Mancuso with Sustainable Opportunity Development Center Inc.
Sustainable Opportunity Development Center Inc. in Salem helps companies get off the ground. Their programs help with planning and connecting business owners with funding.
Most of the people are from the Salem region, but that’s changing.
“We’ve also had folks that sought us out to start their businesses here because they’ve seen the very easy atmosphere for business,” Mancuso said.
Kyle Cranmer left a job in corporate finance to take over his family’s business, Salem Tire Pros and Auto Service.
“Tires, oil changes, suspensions, brakes, pretty much anything on the car. We don’t rebuild engines or transmissions but we will replace them,” Cranmer said.
In 2014, he and his business partner took out loans through the SBA.
“It was able to help us through some slower times, with just some capital, that we were able to secure. And we were able to get some updated equipment,” Cranmer said.
He also said it’s not uncommon to see every rack in the shop in use, and to have cars waiting for service.