Chafee Proposes New Plan to Maximize $125 Million Rhode Island Loan Guaranty Fund

September 2, 2010

FOR IMMEDIATE RELEASE                   
September 1, 2010 
Contact: Mike Trainor
Phone: 401-252-1097                                       
e-mail: mtrainor@chafeeforgovernor.com

 
Warwick, R.I. - Senator Lincoln D. Chafee, independent candidate for Governor of Rhode Island, today announced his 10-point plan to leverage the $125 million Rhode Island Loan Guaranty Fund to maximize job creation while limiting taxpayer risk.

"The $125 million Rhode Island Loan Guaranty Fund is a potentially valuable tool to stimulate job creation, attract new companies to our state, and support new and existing Rhode Island businesses and entrepreneurs," Chafee said.  "I intend to leverage the Fund's job creation potential while striving to limit taxpayer risk through diversification."

"As Governor, I will lead the Economic Development Corporation in a prudent, new direction.  I will work with the General Assembly and the business community to enact the necessary legislative changes to accomplish my job creation objectives for Rhode Island.  My plan has a single goal: to create more high-paying jobs for Rhode Island," Chafee announced. 

"The Chafee plan will be guided by three overriding principles: (1) encouraging and rewarding job creation; (2) investing in management and/or businesses with a proven track record of success; and (3) limiting taxpayer risk through diversification and an open and transparent process."

A summary of the Chafee 10-point plan to leverage the Rhode Island Loan Guaranty Fund is as follows:

o    Business Plan Competition - Nationwide Reach.  Conduct a nationwide business plan competition (similar to a Request for Proposal (RFP) process) that solicits innovative job creation proposals from compelling businesses and entrepreneurs interested in establishing, relocating or expanding their business in Rhode Island.  

o    Aggressive Efforts to Encourage Rhode Island Start-Ups to Participate.  Aggressively recruit Rhode Island companies and local entrepreneurs to participate in the new Rhode Island Loan Guaranty Fund business plan competition.

o    Open, Public Process. Establish and conduct an open, public and transparent Rhode Island business plan competition process (while respecting business confidentially concerns), so that taxpayers and other interested stakeholders have confidence in its results.

o    Partner with Colleges, Universities, and Chambers of Commerce.  Depoliticize and professionalize the jobs plan competition by involving leading organizations such as the Greater Providence, Central Rhode Island, Newport, Blackstone Valley and other area Chambers of Commerce, the state's public and private universities, and other jobs-centric private and public institutions to assist with the business plan competition review and analysis.

o    Leveraging Rhode Island's Assets: Environmentally Friendly Green Technologies, Health and Life Sciences, and Transportation Hub at Airport.  Expand the focus of the Rhode Island Loan Guaranty Fund to accelerate job creation by building upon Rhode Island's existing assets, such as (a) medical/health/life sciences investments in the new Knowledge District of Providence, (b) investments in renewable, environmentally friendly technologies - such as green energy investments at Quonset, and (c) businesses that can maximize existing government investment at the new Station District at TF Green Airport in Warwick. 

o    Priority for Small Business.  Small businesses and start-ups, especially those with a proven management team or a compelling bankable idea, will be recruited to apply.  A designated percentage of the Rhode Island Loan Guaranty Fund will be reserved exclusively for promising small businesses.

o    Loan Guarantee Amounts Range from $250,000 to $6.25 Million.  To maximize the number of companies that can benefit from the Rhode Island Loan Guaranty Fund, guarantees would generally be issued for as little as $250,000 up to a maximum of $6.25 million (or amount larger only with sufficiently compelling job creation opportunities). Target loan guaranty support for 50 or more new or existing businesses.

o    Appropriate Equity Stake; Board Position.  In order to monitor the taxpayer investment in each company and to ensure that the State of Rhode Island will share in the reward of its investment guaranty, the Chafee plan would include negotiating an appropriate level of representation and possible equity stake and board position in each target company being supported by the guaranty program.

o    Commitment to Diversification.  Prudent stewardship of the Rhode Island Loan Guaranty Fund requires sound risk-allocation principles.  Therefore, to limit risk of taxpayer money, no single business would be eligible to receive a guaranty in excess of 5% (or $6.25 million) of the Fund, absent compelling business and job creation reasons to exceed that general cap. 

o    Commitment to Diversity.  The Rhode Island Loan Guaranty Fund should make a special effort to support female- and minority-owned businesses in the loan guarantee awards.

Linc Chafee is a tested leader of unquestioned integrity and a strong independent voice. As Governor, he will work hard to create new jobs, rebuild our economy, solve our chronic budget problems, end corruption, and forge a new way forward for Rhode Island.