Economic Development Leaders Support Walker’s Move To Keep WEDC’s Loan Program

Wisconsin’s public-private job creation and business growth agency would be able to issue loans once again under Gov. Scott Walker’s proposed budget.

Walker proposed phasing out the Wisconsin Economic Development Corporation’s loan program after a 2015 state audit found it failed to follow its own policies, costing the state millions of dollars. In a reversal with the proposed 2017-2019 budget, Walker would allow the agency to issue loans with money that’s been paid back from existing loans.

Local economic development leaders in northern Wisconsin support the move, but they’d like to see a few changes.

Kelly Klein, coordinator for the Iron County Development Zone, said he supports bringing back the loan program.

“I would support a more rigorous review process at the state level,” Klein said. “We do a regional revolving loan fund here in northwest Wisconsin that’s been very successful, and I think the state could do it as well.”

But Klein said he’d like to see loans made available to more types of industry, including tourism. He would also like to see more flexibility for small businesses.

“In the past, it did not help the smaller, little more service-oriented type businesses,” Klein said of the loan program. “I’m not sure what it will turn out to be this time if it does come back and what kind of restrictions are going to be on it as far as the size of the business or the nature of the business.”

Scottie Sandstrom, executive director of the Bayfield County Economic Development Corporation, also supports a revival of the loan program.

“There are some other entities for gap financing for businesses, but, when there (is) additional availability of sources, it’s always good to have more options for the businesses,” Sandstrom said. However, he would also like to see more flexibility for small businesses and start-ups and more money for each job created.

WEDC provided 31 loans last year totaling around $17.2 million. Mark Maley, WEDC spokesman, said the agency was set to end its Business Opportunity Loan Fund by June 30 this year. The agency’s other technology development loan program would remain.

“WEDC is pleased to see a loan program included in Gov. Walker’s budget as it provides us with additional flexibility as we work with businesses seeking to grow in Wisconsin and complements our other economic development programs,” Maley wrote in an email Wednesday. “This budget provision will enable WEDC to reinvest the repayments from existing loans in a way that will continue to help businesses throughout the state.”

The agency is set to see about $6 million in repayments on existing loans by June 30 this year. However, Maley noted the loan program would act as a revolving loan fund under the governor’s proposal and repayments would vary from year-to-year. Walker’s proposal still needs approval from the state Joint Finance Committee and Legislature. Maley said it’s too soon to tell what funding capacity the loan program may have if approved.

Under the last budget bill, Walker had proposed joining the Wisconsin Housing and Economic Development Authority (WHEDA) and WEDC, as well as creating a $55 million regional revolving loan fund. Walker abandoned those plans shortly after the audit found WEDC did not verify the accuracy of information submitted from businesses who received loans or provide accurate and complete details on the numbers of jobs created or retained.

Walker’s budget proposal would not allow the agency to forgive loans as it has done in the past.