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j-ref Supports Entrepreneurs, Helping them Hang Shingle or Expand Enterprise
By: Lisa Brusio Coster

            When an entrepreneur considers starting a business or needs to expand an existing operation, the worst things he or she can do is become desperate and make poor financial decisions.

             Regardless of the size of a business, entrepreneurs need to plan.  They cannot rely on the “catch as catch can” method of financing – it will be the bane of their existence.  Instead, entrepreneurs need to develop a business plan, supported by well thought out financial statements, and approach a bank for funding.  A small business banker will tell them what is required to secure financing.  If the institution is unable to assist them, the banker may be able to offer alternative recommendations. 

             In Howard County, j-ref is an alternative form of financing for entrepreneurs interested in starting or expanding a business. The organization promotes entrepreneurial endeavors, job creation and commercial growth by providing financing, services and assistance to those businesses.

             j-ref is an organization formed in 1992 by the Howard County Chamber of Commerce to provide financing and other needed forms of management and educational assistance to small and emerging businesses in Howard County.   It is a public/private partnership involving the local government, local businesses and the local financial community.  Set up as a not-for-profit corporation, it provides loans up to $250,000 per borrower, including owner-occupied real estate financing, with terms up to seven years.          

             j-ref loan applications are processed using a loan team approach. The loan team, consisting of a board member, a banker, j-ref’s executive director and a paid underwriter, reviews the loan package with the potential borrower. After completing the process, the team makes a final recommendation to the board of directors. The board acts much like a loan committee and makes the final determination to lend to the applicant.

             j-ref is funded by corporate and personal contributions, as well as banks.  When banks partner with j-ref, they satisfy certain requirements, such as those mandated by the Community Reinvestment Act (CRA).  If they earmark investment capital for riskier business ventures, they earn CRA credit.  A business owner will pay a higher rate to borrow from funds like j-ref, but they offer a viable option to start or expand a business.  Ten area banks participate in the j-ref fund with a total commitment of $3,375,000. This funding is structured as revolving lines of credit to j-ref.

             In addition to providing the loans, j-ref offers the community two other services: business monitoring in which the business receives advice from specialists matched to meet the specific needs of the entrepreneur; and, business and strategic plan review and business education. j-ref works closely with its board of directors and its partners, such as The Business Resource Center, SCORE and the Small Business Development Center, to accomplish its review and education mandate. The monitoring that takes place in this relationship protects the j-ref’s investment, and offers the entrepreneur a sounding board for ideas and tactics relevant to the business. 

             To date, j-ref has loaned close to $4 million to nearly 50 businesses creating approximately 500 jobs in Howard County.  j-ref’s current loan portfolio has a balance of almost $1 million with 14 active borrowers. Borrowers represent a wide-range of industries and include a commercial janitorial cleaning service, a barbeque restaurant, an IT company, a child care center, a company that provides products and services to the National Security Agency (NSA), an adolescent psychiatric partial hospital, a communications company, and a physicians’ house call practice.




            j-ref is also the administrator of the Community Development Block Grant (CDBG), a low interest loan option to qualifying businesses.  The CDBG option is part of a federal program via Howard County Government.  It is only available to businesses meeting certain restrictions and criteria for low to moderate income borrowers or for creating low to moderate income jobs. To date, j-ref has made 11 CDBG loans totally almost $600,000.

             In 2007, j-ref expanded its product offerings to the community through a co-loan program.  Historically, j-ref has made loans on a stand-alone basis to for-profit and full time ventures.  With the co-lending program, j-ref partners with banks to complete a transaction, providing entrepreneurs with more capital.  The bank is the lead lender that is unable to loan the entire amount required by a borrower.  j-ref completes the financial deal in a subordinate lending position.  

             The first of these loans was conducted with Howard Bank, in which j-ref and the bank co-loaned a combined total of $300,000 to a restaurant in Ellicott City.  In this situation, j-ref loaned $150,000 while the bank provided a $120,000 loan, as well as a $30,000 line of credit. The seven-year loans are being used for working capital and debt reduction.

             j-ref’s primary goal is to lend to businesses that cannot obtain financing from the traditional sources. Subsequently, j-ref’s secondary mission is to see that these borrowers become bankable within a short period of time and graduate from the j-ref program. 

             On occasion, a graduate of the program will return to j-ref for additional funding.  For example, a military radio communications company borrowed start-up funds from j-ref in 2001.   Since paying off its original loan and graduating, the company requested a second loan in 2007.  j-ref works with past borrowers who are expanding their businesses since they are growing and contributing to the economic development of the county.  j-ref loaned $200,000 to the business to be used to support a new product line and provide working capital for a facility expansion and build-out.

             j-ref works in the community even when it is not making loans.  It produces a public access cable television program, “Down to Business,” to address the diversity of concerns, people and issues of the Howard County business community.  The monthly half hour show is hosted by j-ref’s executive director, Michael Mobley, who provides a wealth of knowledge to the targeted small businesses community, entrepreneurs and business students.


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j-ref Supports Entrepreneurs, Helping them Hang Shingle or Expand Enterprise
By: Lisa Brusio Coster
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