Kennedy Urges Commitment to Small Business Loan Guaranty Program
State Treasurer Says Governor and Legislature Should Fund Program

BATON ROUGE, LA - The State Bond Commission gave preliminary approval today to a loan and credit guaranty program for small businesses needing financing to recover and rebuild from damages caused by Hurricanes Katrina and Rita, according to State Treasurer John Kennedy. Treasurer Kennedy is urging the Governor and the Legislature to include funding for this program in the General Appropriations Bill of the 2006 Regular Legislative Session.

“We developed this program to provide assistance to small business and industry groups that are not receiving the same level of help available to larger businesses and industries under the federal Katrina relief legislation,” said Treasurer Kennedy. “These businesses are extremely important to the state’s economy because they offer the greatest growth potential and a significant number of job opportunities for Louisiana residents.”

The Louisiana Small Business Loan Guaranty Program was authorized under the provisions of Act 41 of the 2006 First Extraordinary Session. The program enables small businesses in the Gulf Opportunity Zone that are recovering from damage caused by wind, water, fire, business interruption or criminal acts as a result of Hurricanes Katrina or Rita to apply for a loan or bond issue through the private activity tax-exempt bond program under the Gulf Opportunity Zone Act of 2005.

The proposed program would be administered by the Department of Economic Development, through the Louisiana Public Facilities Authority (LPFA), using a reserve fund of $70 million to guarantee loans. Bond issues can range from $200,000 to $5 million and are geared toward institutions that would have qualified for the loans or bonds on their own, prior to the hurricanes. The state can provide loan guarantees or credit enhancements of up to 25 percent of each loan amount.

Bond requests exceeding $5 million will be considered based on the availability of funds, and the extent to which the project will benefit the business development area and present substantial employment and investment opportunities. These requests will be permitted only up to 15 percent of the total amount due.

“This program is an extraordinarily important option for rebuilding and will help provide the capital that our businesses so desperately need,” said Treasurer Kennedy. “The LPFA has agreed to administer the program, and it will be up for the Bond Commission’s final approval next month. We have taken the necessary first steps in getting this program up and running, but we need the Administration and the Legislature to show that they are committed to funding it.”


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