FARMINGTON — A new federal program is making $1 million in loans available to people who want to grow small businesses in certain rural Maine communities, according to the United States Department of Agriculture.

Entrepreneurs starting a new venture or looking to expand a business can get a loan of up to $50,000 through the Rural Microentrepreneur Assistance Program, which is being offered to businesses in five counties, including Somerset and Franklin.

Those people applying for a loan must have 10 employees or less, while meeting other criteria based on their individual business plan, according to Virginia Manuel, director of the USDA Rural Development program in Maine.

The program hopes to create dozens of new jobs and help existing small businesses retain employees, something that is especially vital in rural communities without large companies, Manuel said.

“Per capita in Maine there are more (small businesses) than almost anywhere else in the nation, and rural areas of the state rely on them the most to support their local economies,” she said.

Federal tax dollars being used to initiate the program will establish permanent revolving-loan funds in the designated communities, where businesses will repay the loans so the money can be loaned out again.

The loan program in Maine is divided into two regional centers to support rural business development, Manuel said.

Community Concepts Finance Corporation, a nonprofit economic development group, is managing the portion that makes $500,000 in loans available to businesses in Androscoggin, Franklin, Oxford, Piscataquis and Somerset counties, she said.

A similar group is managing $500,000 in loans for businesses in Lewiston and Auburn in Androscoggin County.

There is high demand for the loans among people who want to open a business but can’t find banks willing to lend start-up capital, according to Joe Balchunas, a loan officer for Community Concepts Finance Corporation.

“It’s usually a new business in its early stages and a bank may look at a business just starting out as a big risk,” he said. “That’s the gap we’re trying to fill.”

People hoping to open restaurants, retail stores and other small businesses have already started applying, despite the program just being announced Nov. 10, he said, declining to release names of applicants because the loan has not been approved yet.

Interest rates for loans through the program range from 7 to 9 percent, which is higher than typical bank loans that charge 6 or 7 percent interest.

But the program managers review the loans each year and can reduce interest rates if the business is paying on time and performing well, Balchunas said.

The federal program also awarded a $105,000 grant to each of the nonprofit groups managing the loans. These grants will pay for the groups to provide consulting services to the small businesses seeking loans, Manuel said.

Balchunas said more information on the loans is posted at his group’s website, www.community-concepts.org. He said people looking to apply can call him at 333-6410.

David Robinson – 861-9287

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