EDA Newsletter

Volume 2; Issue 9


In this Issue:

New Commerce Initiatives to Foster Innovation and Entrepreneurship

Commerce Secretary Locke Announces the Office of Innovation and Entrepreneurship and a National Advisory Council on Innovation and Entrepreneurship

On September 24, 2009, U.S. Commerce Secretary Gary Locke announced plans to create a new Office of Innovation and Entrepreneurship within the Department of Commerce and launch a National Advisory Council on Innovation and Entrepreneurship. Both new initiatives will help leverage the entire federal government on behalf of promoting entrepreneurship in America. The new office is expected to announce additional initiatives in the coming months.

The new Office of Innovation and Entrepreneurship, which will answer directly to the secretary, will be geared toward the first step in the business cycle: moving an idea from someone's imagination, or from a research lab, into a business plan.

The National Advisory Council on Innovation and Entrepreneurship will advise the Commerce Department on policy relating to building small businesses and help to keep the department engaged in a regular dialogue with the entrepreneurship and small business communities. The council is expected to be comprised of successful entrepreneurs, innovators, investors, non-profit leaders and other experts.

The mission of the Office of Innovation and Entrepreneurship is to unleash and maximize the economic potential of new ideas by removing barriers to entrepreneurship and the development of high-growth and innovation-based businesses. The office will report directly to Locke and focus specifically on identifying issues and programs most important to entrepreneurs. Working closely with the White House and other federal agencies, this new office will drive policies that help entrepreneurs translate new ideas, products and services into economic growth. The office will focus on the following areas:

  • Encouraging Entrepreneurs through Education, Training, and Mentoring
  • Improving Access to Capital
  • Accelerating Technology Commercialization of Federal R&D
  • Strengthening Interagency Collaboration and Coordination
  • Providing Data, Research, and Technical Resources for Entrepreneurs
  • Exploring Policy Incentives to Support Entrepreneurs and Investors
  • National Advisory Council on Innovation and Entrepreneurship

The National Advisory Council on Innovation and Entrepreneurship will advise Locke and the administration on key issues relating to innovation and entrepreneurship. The council will include successful entrepreneurs, innovators, angel investors, venture capitalists, non-profit leaders and other experts who will identify and recommend solutions to issues critical to the creation and development of entrepreneurship ecosystems that will generate new businesses and jobs. It will also serve as a vehicle for ongoing dialogue with the entrepreneurship community and other stakeholders.



EDA's Last Recovery Act Investment to spur jobs and technology-based business Incubation

$6 Million Investment Completes EDA's Recovery Act Grants One-Year Ahead of Schedule

On Friday, September 25, 2009, EDA announced its final American Recovery and Reinvestment Act (ARRA) grantee, completing their obligation of ARRA funds one-year ahead of schedule. The $6 million investment at Ben Franklin Technology Partners of Northeastern Pennsylvania will increase its ability to deliver to early-stage technology companies hands-on support, guidance and connections to key resources during the economic recovery. Additionally, the Recovery Act grant will expand Ben Franklin TechVentures, its incubator/post-incubator facility, creating jobs in the short term.

U.S. Commerce Secretary Gary Locke, White House Chief Technology Officer Aneesh Chopra and U.S. Assistant Secretary of Commerce for Economic Development John R. Fernandez visited Ben Franklin Technology Partners of Northeastern Pennsylvania at Lehigh University to discuss job creation, the American Recovery and Reinvestment Act (ARRA) and the Obama Administration's strategy to spur American innovation.

Group Picture
Bethlehem, Pa. (September 25, 2009) — Pictured (L-R): Top row: R. Chadwick Paul, President and CEO, BFTP/NEA; Gary Locke, U.S. Secretary of Commerce; Aneesh Chopra, White House Chief Technology Officer. Bottom row: Willie Taylor, Philadelphia Regional Director, EDA; John Fernandez, Assistant Secretary of Commerce for Economic Development. (Photograph by: Kenny EK)

"America 's creative thinkers and innovators will lead the way to economic recovery," Locke said. "President Obama is taking historic steps to lay the foundation for the innovation economy of the future. Earlier this week he laid out a strategy for American innovation that builds on more than $100 billion of Recovery Act funds that support innovation. Today we move that strategy forward."

Responding to aggressive goals set out by President Obama and Vice President Biden, Secretary Locke directed the Commerce Department's Economic Development Administration to act expeditiously to deliver Recovery Act funds to communities where they were needed most. Across the country, the department has made vital investments in initiatives like workforce development and training centers, regional business incubators and transportation projects to connect communities to key markets.

"Ben Franklin TechVentures will bring together technology entrepreneurs, Ben Franklin staff and Lehigh University faculty and students to their mutual advantage," R. Chadwick Paul, Jr., president and chief executive officer of the Ben Franklin Technology Partners of Northeastern Pennsylvania, said. "This 47,000 square-foot building addition will accelerate growth and innovation in our technology economy as more space becomes available in our expanded incubator/post-incubator facility."

Ben Franklin Technology Partners of Northeastern Pennsylvania is part of a four-center, state-funded economic development initiative that links companies with business and technical experts, universities, funding, and other resources to help them prosper through innovation. The organization's strategy encompasses three key areas: developing early stage, technology-oriented companies; helping established manufacturers creatively apply new technologies and business practices; and promoting an innovative community-wide infrastructure that fosters a favorable business environment for high-growth companies. It also operates Ben Franklin TechVentures, an award-winning incubator/post-incubator facility, on Lehigh's campus. Ben Franklin Technology Partners helps clients to achieve and sustain market success and competitive advantage through technology. For more information, visit: http://nep.benfranklin.org/.



Many Small Steps Make Great Strides: Microfinance Programs Help Provide Economic Stability for Entrepreneurs

Entrepreneurs are the engine of economic growth. Yet, as they start and grow their businesses, entrepreneurs may be unable to access credit through traditional channels and often turn to organizations that can provide lending capital as well as support services. This practice — routinely called Microfinance — began more than four decades ago in the developing world, where many microenterprises get by with small loans of hundreds of dollars. In the U.S., the term microenterprise generally refers to firms with five or fewer employees that are seeking loans up to $35,000.

Microenterprise is a big business in the United States. According to data from the Aspen Institute, more than 500 programs across the U.S. provide assistance to 150,000 to 200,000 microenterprise owners each year. However, that number represents a small portion of the roughly 20 million microenterprises that now operate across the country.

One prominent microlender, ACCION New Mexico • Arizona • Colorado (ACCION), is an independent, nonprofit organization that is a member of the U.S. ACCION Network, a group of independent microlending nonprofits across the United States affiliated with ACCION International. In its 15-year history, ACCION has financed over $27 million in capital to small businesses in more than 150 communities within its tri-state region. Through this lending program, local entrepreneurs are able to create ample opportunity for sustainable employment throughout the region. While economic development is a critical aspect of their mission, the organization's focus on empowerment and building community among its clients and partners far transcends dollars and cents. ACCION's mission encapsulates a broader set of values including passion, integrity and excellence, with the human dignity component of entrepreneurship as part of its vision.

ACCION serves clients with business interests ranging from bakeries, grocery stores and meat markets to medical transcription, construction and geographic landscaping. The common denominator across clients, however, is the profound influence and lasting impact that results from working with ACCION. While the amount of each microloan varies — with an average loan size of $5,700 — the intangible benefits of security, self-sufficiency and connectedness are constant in all of the investments.

"Through our programs, our clients learn successful strategies to become more financially healthy and build stronger businesses." says Lynn Trojahn, Vice President of Advancement. "ACCION clients want a hand-up, not a handout." Through client programs such as the ACCION Women's Entrepreneurial Leadership Program and other partnerships with traditional financial institutions, small business development centers and the U.S. Small Business Administration (SBA), ACCION provides client services that help foster and preserve competitive local and regional economies.

ACCION also works with organizations and agencies to further its mission including EDA. In June 2009, U.S Commerce Secretary Gary Locke announced a $1.75 million EDA Recovery Act grant to help build ACCION's regional headquarters. A multi-purpose facility in the historic Sawmill District of Albuquerque, the structure will integrate office and training space, broadening the reach of ACCION's client services. The project is set to break ground on October 7, 2009.

The EDA investment will create many economic development opportunities far beyond the immediate job creation tied to constructing the headquarters. To date, ACCION's microfinance programs have produced impressive results: more than 3,600 jobs across New Mexico created or supported by an ACCION-backed business; a 94 percent client loan repayment rate; and an average increase of roughly 230 percent in business profitability among low-income clients who received three consecutive loans. Compounded by EDA's recent grant, the results are expected to increase, bringing more prosperity to the communities and regions serviced by ACCION.

ACCION uniquely demonstrates how communities and regions can thrive from microfinance programs. The following lessons learned will help practitioners better understand the links between microfinance and economic development:

  • Effective microenterprise programs go beyond finance. Most clients have a host of issues and challenges, often related to financial literacy or a need for other kinds of training. It's not enough to simply provide a loan and step away. Other support tools are necessary.
  • Microenterprise organizations lack the staff and resources to address all of these social and economic challenges. Thus, strong partnership with community development organizations, faith based organizations and other partners are essential.
  • Effective microenterprise programs do not focus on single transactions. They seek to build long-term relationships with their customers.
  • Microfinance is not just about economic development. While these businesses support economic goals, microenterprise programs also empower and educate their customers about how to succeed in today's economy.

By providing capital and other support services to entrepreneurs, microfinance programs jumpstart business development initiatives and aid in the implementation of sustainable economic development practices within communities and regions.

For more information about ACCION New Mexico • Arizona • Colorado, please visit http://accionnm.org/index.php.



Revolving Loan Fund Innovative Practices: Mo-Kan Regional Council Revolving Loan Fund

Headquartered in St. Joseph, Missouri, the Mo-Kan Regional Council is one of 19 Regional Planning Commissions (RPCs) located across the state of Missouri. Mo-Kan is unique among RPCs for several reasons. First, it's one of the few RPCs that serves two states, with four Missouri counties and two Kansas counties within its service area. Second, it operates a highly effective and innovative revolving loan fund (RLF) program capitalized through EDA.

Mo-Kan's RLF program dates back to 1991. It's one of 14 RLFs now operating in Missouri and is part of a nationwide network of 577 EDA-backed RLF programs now operating across the United States. These RLFs are a key part of the business financing landscape, especially in smaller rural communities.

Like many RLF operators, the Mo-Kan Regional Council serves a predominantly rural region. The main urban center, St. Joseph, has a population of 75,000, but Mo-Kan's overall service area (of approximately 125,000 residents) is spread widely over a six county region.

Like most RPCs, Mo-Kan operates a variety of programs that include transportation planning, workforce development and the provision of technical assistance to local governments. In the area of business finance, Mo-Kan Development, Inc. manages the EDA RLF along with SBA 7(a) and 504 loan programs.

Mo-Kan's Executive Director, Tom Bliss, views the RLF as an important part of the entire RPC portfolio of services. As he notes, "We really push the RLF with local businesses. It provides a unique asset for Mo-Kan."

The Mo-Kan region is aggressively pursuing a range of economic development opportunities, but it is especially interested in working with firms in key sectors such as bio-agriculture and alternative energy. The region already has strong footholds in both of these sectors.

While RLF loans are available to all businesses regardless of sector, many of Mo-Kan's more successful investments have occurred with firms in related industries. For example, the RLF has made several investments in the Shatto Milk Company. Shatto came to Mo-Kan after many years of struggling to survive in the traditional dairy industry. Instead of selling to processors, Shatto's owner, Leroy Shatto, wanted to move in a new direction, producing hormone-free milk that they would directly market in glass bottles. Thanks to RLF investments, the firm was able to retool and is now a producer of high quality hormone-free milk products. In fact, the Small Business Administration (SBA) named Leroy Shatto Missouri 's Small Business Owner of the Year in 2006.

Ameri-Pac, another RLF customer, produces and packages animal pharmaceuticals. Thanks to RLF investments, Ameri-Pac has expanded its facilities and plans to increase employment by roughly 30 percent.

Tom Bliss recommends that regional planning organizations should aggressively pursue the RLF program if they have the needed staff capacity in place. He suggests that RLF operators devote attention to educating their boards on how RLFs operate, as many board members may have limited financial experience. He also suggests creating a strong loan committee with this requisite expertise. "We often get excited about local entrepreneurs and want to do all we can to help them succeed," Bliss notes, "but the loan committee helps ensure that we don't get carried away and that we make good business deals." If you have these tools in place, Bliss believes that "RLFs are another important service that you can provide for local businesses."

For more information visit: www.mo-kan.org

RLF Directory: http://www.eda.gov/AboutEDA/RLF.xml



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John R. Fernandez has been appointed by President Obama to serve as U.S. Assistant Secretary of Commerce for Economic Development, and was confirmed by the U.S. Senate on September 10, 2009. Fernandez is the former Mayor of Bloomington, Indiana. For more information, click here.

Brian P. McGowan has been appointed U.S. Deputy Assistant Secretary of Commerce for Economic Development and Chief Operating Officer of EDA. McGowan is the former Deputy Secretary for Economic Development and Commerce for the State of California. For more information, click here.

WE WANT TO HEAR FROM YOU

EDA is continually looking for economic development success stories and best practices that can be shared with economic development professionals across the nation. If you have a success story - either EDA funded or not - that you'd like to share, please email the subject and a brief description to lpangretic@eda.doc.gov for possible publication in a future issue of EDA Update.

APA's Tools-of-the-Trade Part Eight: Strategy 7 — Infrastructure Provision

It is critical for state, regional and local governments to recognize that communities' development capacity and long-term competitiveness are sustained by transportation, water and utility infrastructure systems. APA's Tools-of-the-Trade (Website) features how planning and development agencies can utilize capital improvement programs (CIPs) to implement a comprehensive plan that supports commercial, industrial, and residential growth.

EDA is now accepting applications for Global Climate Change Mitigation Incentive Fund assistance

EDA's Global Climate Change Mitigation Incentive Fund (GCCMIF) was established to strengthen the linkages between economic development and environmental quality. The purpose and mission of the GCCMIF is to finance projects that foster economic development by advancing the green economy in distressed communities. The GCCMIF supports projects that create jobs through, and increase private capital investment in, efforts to limit the nation's dependence on fossil fuels, enhance energy efficiency, curb greenhouse gas emissions and protect natural systems. For more detailed information click here.

COMING SOON!

October 4-6, 2009

APA's Federal Policy and Program Briefing, Washington, DC [Website]

October 4-7, 2009

IEDC 2009 Annual Conference, Renewable Communities, Reno, NV [Website]

October 11-13, 2009

University Economic Development Association Annual Summit, San Antonio, TX [Website]

October 28-30, 2009

NADO's 2009 National Rural Transportation Peer Learning Conference, Savannah, GA [Website]

November 6-7, 2009

APA's PTS Workshop: Planning for Prosperity in the "New Normal" Economy, San Francisco, CA [Website]

November 16-22, 2009

Global Entrepreneurship Week [Website]