The horror stories Doug Edmonson heard about getting a Small Business Administration loan didn't turn out to be the case when he sought to build a larger carpet store.
The SBA loan he got last year through the CSRA Development Companies was among the 31 loans issued for a total of $26 million. The three employees Mr. Edmonson is adding to his payroll are part of the 358 jobs created by all SBA loans in the Augusta region.
"I couldn't sit in that old building any longer," while major carpet chains erect modern facilities in the Augusta area, he said. "I look like I can compete with them now."
Helping independent businesses compete and add workers are the key goals of the SBA program. While some critics in Washington suggest it be abolished for propping up unhealthy enterprises, the Augusta regional administrator had no defaults during its last fiscal year.
Since the CSRA Development Companies - part of the CSRA Regional Development Center - began offering the loans in 1979, it has had 36 defaults out of 373 loans. That 9.7 percent failure rate just slides under the company's board ceiling of 10 percent, according to Randy Griffin, executive vice president.
Traditional lenders get upset when their default rate exceeds 1 percent, he said. Mr Griffin, though, has sent borrowers with particularly strong applications to banks since his program is designed to help riskier ventures.
The program works by spreading the risk while requiring half the usual down payment from business owners. In the most popular of the three loans offered by the Development Companies, borrowers put in 10 percent, the SBA funds 40 percent through the sale of government-secured debentures, and private banks kick in 50 percent.
Bankers like halving the risk, according to Ralph A. Ireland III, owner of Ireland Electric Supply and recipient of a recent loan. He talked with several bankers who directed him to Mr. Griffin's office rather than look at his application.
With the loan, Mr. Ireland will install a computer inventory system in a larger building to help him compete with national chains in the area.
"It will really change the way we are doing business now, and our main goal is to improve customer service," he said. "We have to compete with service."
Mr. Ireland and other borrowers credit Mr. Griffin with providing service vital to the program's success. Mr. Griffin credits his board of bankers and local officeholders.
"If you're willing to go through all the paperwork, I think it's worth it," said Ed Hodge, owner of Gold's Gym.
The 30 people he expect to hire might agree. It took three months to prepare the application and another one to get approval in Mr. Hodge's case, after he spent $40,000 on research to demonstrate his earnestness to the loan Committee.