May 6, 2009 > Stimulus money will benefit local business
Stimulus money will benefit local business
By Rhonda Rigenhagen
Several Silicon Valley executives explained a variety of ways that federal stimulus funds can profit local companies of all sizes. Last week's presentation was part of a Fremont Chamber of Commerce luncheon entitled, "Economic Stimulus Package: What's In It For Us?"
Keynote speaker Russell Hancock, president of Joint Venture: Silicon Valley Network, set the stage by reviewing the history of Bay Area business, describing where it is today, and predicting where it is headed. His forecast included:
* an economic upturn in the near future;
* an increasing number of companies that will meet their needs with consultants and partnerships rather than fulltime employees; and
* a boom in businesses that provide "green" products and services.
The stimulus package, officially known as the American Recovery and Reinvestment Act of 2009, may help bring about such a future. Certainly it benefits new and struggling firms today, explained local representatives of federal and city government, a financial institution, and two large employers.
"SBA lending is on sale," exclaimed Michael C. Elkin, assistant district director for the Small Business Administration. "Congress has eliminated all loan fees, so they've dropped from 3 percent to zero."
Federal guarantees for new loans are now 90 percent, up from 75-85 percent, he said. In addition, a business stabilization program launching this month enables companies with financial problems to borrow up to $35,000 for five years. Payments are deferred for 12 months, and the loan is 100 percent guaranteed.
He referred the audience to three useful web sites:
* Recovery.gov shows where stimulus dollars are being spent.
* FedBizOps.gov provides bid information on all federal contracts over $25,000.
* SBA.gov has a schedule of training classes and webinars for small businesses.
The City of Fremont is eligible for $10.8 million in stimulus funds, explained Economic Development Director Daren Fields. About half is related to highway construction, and a significant amount is for energy efficiency. "We're applying for all we are eligible for and pursuing it aggressively."
Fields outlined other measures that, while not part of the federal package, were recently approved by the City of Fremont to retain and attract firms.
A 10 percent reduction in development impact fees, with payment deferred until occupancy, is intended to encourage construction by reducing costs and improving cash flow. Impact fees were reduced 25 percent in the Central Business District. The City also exempts clean technology firms from paying business tax. The measures will be in effect until 2011.
Businesses in the Centerville, Irvington or Niles redevelopment areas can apply for a 15-year, no-interest improvement loan up to $200,000. Fields mentioned several other incentives, including a 5 percent preference when Fremont companies bid on City contracts. He referred attendees to ThinkFremont.gov for more information.
The stimulus package invests in renewable energy in a big way, according to John Scott, vice president of Business Development at Solyndra. Billions in renewable energy loan guarantees and a 30 percent investment tax credit are expected to spur development among companies such as his.
"There is a sense of urgency to address climate change in a way that creates jobs," Scott noted. Solyndra, which manufactures tubular solar panels for large-scale commercial use, recently received a $535-million loan guarantee to build a plant in Fremont. The project will employ some 3,000 people during construction. Company employment, currently at 500, is expected to triple once the facility is built, he said.
Accelerated depreciation, tax credits, funding for job training, and $5.5 billion for making federal buildings more energy efficient will also help the industry and the country by "building our way out of an economic downturn."
Stimulus support "will free money for small biotechnology and biomedical companies to survive," asserted Dennis Murphy, vice president of Amgen's Fremont manufacturing operations. "They bridge the gap between concept and commercialization."
Billions of dollars are available for research and development, job training, comparative research (which evaluates costs and benefits), and incentives such as tax credits for innovation, he added.
In Fremont, Amgen manufactures a drug that slows the growth and spread of colorectal cancer cells.
"Our research shows that, after many months, some of the economic numbers are starting to show improvement," noted Patricia Williams, vice president and director for Merrill Lynch in the Silicon Valley.
She provided encouraging statistics about mortgages, loans, lines of credit, bonds and grants. Perhaps most revealing, she said, was the strong international demand for $5 billion in government-backed, tax-advantaged California BABs (Buy American Bonds).
Rather than administer loans directly, the government provides the means for financial institutions to make funds available, she explained. "A partnership with business, financial institutions and government can come together with the right incentives and confidence to move forward and bring us out of this negative economic cycle."