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16 | December 2009 Four Rivers Business Journal fourriversbusiness.com | 17

Jury out on new lending legislation

Views vary on how

much it will help area

small businesses

BY JOE WALKER

jwalker@paducahsun.com

Shawn Dowdy hopes pending legislation

to improve small business

lending will help him expand his

Mayfield deer-processing business that

has exploded in its first six years.

“We need someone to look at the business,

take it seriously and lend us money to

make the improvements we need to make,”

said the operator of Dowdy’s Taxidermy &

Deer Processing, 1461 Baltimore Church

Road. “Right now we need more money,

better equipment and a larger facility.”

He took over the 40-year-old family taxidermy

firm a decade ago from his father, but

saw the potential for deer processing. In 2003,

a $35,000 Small Business Administration

loan helped Dowdy build a slaughterhouse.

What had been a sideline now takes in

600 deer annually as hunting seasons have

grown longer and more commercialized.

Dowdy projects the growing need to process

800 to 1,000 deer annually, producing

a range of venison products from summer

sausage to bratwurst to Cajun jerky.

Growth so far has boosted seasonal

employment from four to eight, he said.

“We’ve used the unemployment office to

get people trained to help process the meat

and then try to find them full-time jobs

elsewhere when hunting season is over.”

Since the beginning, banks have been

cautious about lending for deer processing

— something they know little about and

has a relatively short track record, he said.

“I thought I was a businessman until I

had to sit down and put together a business

plan,” Dowdy said. “Then I realized just

how stupid I am.”

He said that financing much of the processing

business himself left him taking

a huge risk during the first two years.

Loan upgrades

With the Obama administration’s backing,

the Small Business Financing and

Investment Act of 2009 received strong, bi-

JOHN WRIGHT | The Sun

Above, owner Shawn Dowdy shows several of the deer meat products that

Dowdy’s Taxidermy and Deer Processing produces at Mayfield. He hopes to get

another Small Business Administration loan to expand the business. Richard

DeArmond works with a deer mount, right, as this stuffed black bear stands

ready for display in the back shop of Dowdy’s Taxidermy/Deer Processing in

Graves County.

partisan support in the House and awaits

Senate consideration, said Kristin Walker,

press secretary for Rep. Ed Whitfield, R-

Hopkinsville. Whitfield supports the bill

and doesn’t anticipate much opposition in

the Senate, she said.

“With such strong support from members

on both sides of the aisle, and President

Obama, Congressman Whitfield

thinks final passage is likely, although the

timing is still unclear,” Walker said.

Passed Oct. 29, the House version of the

legislation combined eight bills that provide

incentives, increase the size of SBA

loans and make lending easier. The legislation

is estimated to generate $44 billion in

new lending nationwide.

A key provision of HR 3854 raises limits

on two primary SBA loan programs from

$2 million to $5 million, and increases

the cap for microloans — aimed at small

businesses and start-ups — from $35,000 to

$50,000.

“One thing it will do is open up a whole

new level of opportunities for businesses

with higher borrowing needs,” said Chris

Wooldridge, director of the Murray State

University Small Business Development

Center. “Some businesses need more than

the current SBA loan limits provide, which

means supplementing an SBA loan with a

standard commercial loan.”

Wooldridge, a former banker, said he is

encouraged by a component to increase

maximum lending to $5.5 million for manufacturing

firms.

Cautious lending

The down economy has made community

banks very careful in business lending,

said Mark Link, chief credit officer for

Paducah Bank.

“I don’t think our credit standards have

changed that much, but one problem is

weakened sales. With unemployment over

10 percent, buyers are being very cautious,”

he said. “I think that has done more

to hurt small business than banks’ willingness

to lend.”

Link said most banks have the capital

and desire to lend, which makes him uncertain

how much the legislative provisions

to further capitalize banks will have

on commercial lending. To receive more

capital, community banks would have to

submit plans to increase small business

lending.

“I don’t see us doing that because we’re

well capitalized and there are a lot of potential

strings attached,” he said.

But increased SBA loan caps under the

legislation are encouraging because those

amounts haven’t changed in 10 years,

while business expansion costs kept rising,

Link said.

“Higher loan amounts, coupled with no

origination fee, are an even greater inducement

for many borrowers to be able

to expand,” he said. “They can get a guarantee

on a much larger loan, and the bank

has less risk.”

Even during the recession, Paducah

Bank increased SBA lending, largely be-

Highlights of House

Resolution 3854

■ Increases the maximum loan

amount for various SBA loans.

■ Limits on two primary loan programs

increase from $2 million to

$5 million.

■ Limits on manufacturing loans

increase from $4 million to $5.5

million.

■ Limits on microloans, aimed at

small businesses and start-ups, increase

form $35,000 to $50,000.

■ Extends some small business

programs established in the stimulus

package.

■ Makes loan guarantees to

small health care firms buying

health information technology.

■ Establishes a Rural Lender

Outreach program to reduce the paperwork

burden of many SBA loans.

■ Directs the SBA to set up a

tiered schedule of disbursing small

business disaster assistance with

significantly larger amounts available

to loan recipients.

■ Passed House Oct. 29; strong

support in Senate and Obama administration.

■ Estimated to generate $44 billion

in new lending nationwide.

Sources: U.S. Rep. Ed Whitfield, Obama administration

cause the government eliminated origination

fees and raised its guarantee on some

loans to 90 percent, Link said.

During the last federal fiscal year, ending

Sept. 30, Paducah Bank made 36 SBA

loans totaling $4.7 million, Link said. That

ranked second in Kentucky and was a 70

percent increase over 21 loans, totaling

$1.5 million, the previous year.

Not good enough

Norma Pruitt, who helped Dowdy with

his original SBA loan, said the new legislation

appears too restrictive, mainly

because refinancing and other portions of

the regulations require business expansions

or adding jobs during difficult economic

times.

“The SBA, the banks, Congress and others

must accept the reality that most businesses

are seeing downward trends not

Please see LENDING | 21

Lion’s share

Nuclear cleanup dominates

stimulus work in Purchase area

BY JOE WALKER

jwalker@paducahsun.com

Now 60, former tire worker John

Crowder had all but given up hope of

finding a full-time job until the federal

stimulus program funneled nearly $79

million into cleanup at the Paducah

Gaseous Diffusion Plant.

He is one of 207 people whom Kevilbased

Paducah Remediation Services

and its subcontractors hired this year

to clean up and tear down three old,

contaminated buildings. Although the

work already was planned, the influx

of American Recovery and Reinvestment

Act money accelerated it by 22

years for one of the structures.

“I didn’t think anyone would hire

me,” said Crowder, laid off in late 2005

from his 19-year job as a maintenance

mechanic at Mayfield’s Continental

Tire plant.

The tire plant closed in 2007, costing

hundreds of jobs. After his tire career

ended, Crowder went back to college to

complete an associate degree, worked

as a substitute teacher at a vocational

school and took care of his 3-year-old

grandson, Caleb. Those endeavors

were rewarding, he said, but he wasn’t

ready to retire.

“I applied for a bunch of jobs over the

last four years, so I thought I’d try one

more time,” he said. “This one paid off.”

PRS has hired electricians, mechanics,

heavy equipment operators, engineers,

radiation control technicians,

safety specialists and a wide range of administrative

and technical support staff.

Most of those people were unemployed or

underemployed when they were hired.

“Increasing our workforce by about

40 percent in just a few months has

been a challenge for a small company,”

said Dennis Ferrigno, PRS site manager.

Besides cleanup workers, PRS added

supervisors, managers and support personnel,

including payroll, accounting, human

resources, purchasing, and health

and safety, Ferrigno said. PRS also will

spend millions of dollars with local subcontractors

and vendors.

Petter Supply Co., a heavy supplier

of the plant and its cleanup contractors,

has no way of tracking stimulus

sales versus normal sales, CEO Robert

Petter said.

“What I can say is that our plantrelated

business has stayed relatively

level or increased during this downturn,”

he said. “That doesn’t hold true

with other sectors of our business. It’s

making an impact, although we really

can’t trace those dollars back.”

Money vs. jobs

PRS’ share was about 1.3 percent

of $6 billion in new stimulus funding

to hasten nuclear cleanup and create

thousands of jobs across 12 states. The

Paducah cleanup money made up nearly

three-fourths of the $111 million in

stimulus funding this year from the

lakes area west, said Brad Davis, who

compiled the list for the Purchase Area

Development District.

A much trickier proposition is determining

stimulus funding’s net effect

on employment, said Davis, who loosely

estimated the total number jobs created

or saved in the Purchase at 48.

In late October, Gov. Steve Beshear

said the $2.9 billion in Kentucky stimulus

funding had created or preserved

nearly 2,300 jobs statewide. Adding

estimates from the Obama administration,

the number swelled to nearly

4,200 jobs with another $800 million in

stimulus money coming.

Employment numbers are subject to

great scrutiny because it’s difficult to

measure how many jobs would have

been gained or lost without the stimulus

package, said Ken Troske, director

of the University of Kentucky Center

for Business and Economic Research.

“One thing I’ve seen is a lot of money

went toward projects that were already

Please see STIMULUS | 21

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