Keeping Growth Close to Home How the West Virginia First Small Business Growth Program Protects Banking Relationships By A. GARNER MARKS, Member, Spilman Thomas & Battle PLLC Community bankers in West Virginia generally know more about a customer’s business than anyone outside the family who runs it. They often get the call when a manufacturer wants to add a production line, or when an employer’s next move could spur new jobs well beyond its current payroll. In my experience, that relationship is one of this state’s many economic advantages. But growth doesn’t always fit what a community bank can lend. A company can have a good plan and a strong banking relationship and still need a longer time horizon, more flexible terms, or a structure that doesn’t eat into working capital while it expands. Other times, a business has simply grown past the lending capacity of the bank that helped it get there. None of that has to mean the relationship gets left behind. Bring in a capital partner with the scale to write a bigger check and the patience to structure it right, and the local bank can stay exactly where it belongs — at the center of the relationship — while the company gets access to the kind of capital that used to mean going elsewhere. WHAT WVEDA ALREADY OFFERS — AND WHERE IT STOPS West Virginia already has real tools for this. Through its Business and Industrial Development Loan Program, the West Virginia Economic Development Authority (WVEDA) can finance up to 100% of a qualifying project’s cost for land, buildings and equipment; where the Authority lends less than the full amount, it looks to other sources — often a participating bank — to complete the project. The program draws on a revolving loan of up to $175 million from the Board of Treasury Investments, with a $15 million cap per project. The Authority’s revolving Insurance Fund is the risk-sharing piece; it can insure a bank’s loan to a company, including working-capital loans and, where they support job creation or expansion, certain refinancings. The WVEDA generally can’t make a working-capital loan itself — but it can stand behind the capital partner that does. For larger capital investments, the WVEDA can also issue revenue bonds and notes, the familiar industrial-revenue-bond route. And through its management of the Jobs Investment Trust, it reaches early-stage and higher-risk equity that a bank isn’t built to provide. Those tools cover a lot of ground, but each is built for a specific situation: a fixed-asset loan, a credit enhancement, a bond-eligible project or early-stage equity. The WVEDA is an important part of business development in West Virginia, but plenty of established businesses may fall outside those lines. They aren’t startups chasing venture money, and what they need isn’t just a fixed-asset loan. They’re financing an acquisition, buying out a retiring owner, or building the systems and staff needed to serve a larger market. A NEW TOOL THAT CLOSES THE GAP The West Virginia First Small Business Growth Program was built to close the gap. It’s designed to bring patient, flexible growth capital to established businesses across the state, giving companies another way to invest in what’s next without trading a hometown banking relationship for a bigger check. And Spilman Thomas & Battle was proud to work with the legislature to bring it into being. Advantage Capital, a leading small-business investing firm, is one of the partners helping to deliver that capital. As a firm with a national footprint, it brings the scale and access 16 WEST VIRGINIA BANKER
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