As small businesses struggle with high energy, food, transportation and other immutable costs, problems like licensing hurdles and reluctant lenders are adding to would-be entrepreneurs’ burdens and may be more fixable, agency officials told a Senate panel Thursday. 
"The largest problem we have here is access to capital," former Sen. Emmet Hansen, director of the V.I. Small Business Development Center, told the Committee on Economic Development, Agriculture and Planning.
Hansen said he feels banks are too reluctant to lend, even with substantial loan guarantees and collateral support. When Sen. Janette Millin Young, chairwoman of the committee, asked what sort of support and guarantees the SBDA gives the banks to encourage lending, Hansen said "it is as high as 90 percent."
"One can say the banks’ exposure is close to zero," Hansen said.
"I must say some of the problem is in the hands of the business owners," Hansen said. Many of them don’t have their paperwork in order, he said. "But of those who do have their paperwork in order, the banks are not lending and the money is not there."
Sen. Kenneth Gittens asked how much SBDA has available and how much is distributed to support small business loans.
Jennifer Nugent-Hill, V.I. Economic Development Authority assistant director, said SBDA has $13 million in federal grant funding to support loans. And of that, "we have spent or obligated … I think pretty close to $1 million that is out there in the community," she said.
"We have a big challenge in that the banks are not participating as we expect them to," she said.
Senators discussed whether the Legislature could add to banks’ incentive to lend with legislation or by moving government accounts to banks that lend, but no concrete proposals were offered during Thursday’s hearing.
Permitting is another barrier that moves the break-even point for a business farther away, several testifiers said.
Sen. Judi Buckley said business owners had told her they struggled to get all their health, safety, fire and business licenses, and that the timing and procedures seemed to vary.
"Not everyone is clear on what the requirements are and there is some confusion over what to do," Buckley said.
Anyone who wants to get a business license can come in to the Division of Licensing and Consumer Affairs and a licensing officer will tell them how to register their trademarks and business with the Office of the Lieutenant Governor, "and then they can file an online application with us," said DLCA Commissioner Wayne Biggs. "But then they still need to do the health and fire inspections, which we do not do," he said.
If getting fire and health inspections is hindering the process of opening a business, "do you think it would be feasible for Fire Services and Health to have separate processes so that the business is not held up?" asked Sen. Diane Capehart.
"They are moving that way," Biggs said, adding that most jurisdictions do have separate fire, health and safety inspections.
Right now, there is a sort of Catch-22 situation, where businesses need to show they have a business license lined up before they can access lending, and they can’t get the fire inspection they need to get a business license until they already have money to set up a business that can be inspected by Fire Services, Biggs said.
To shortcut the problem, DLCA now asks Fire Services to issue a permit so DLCA can issue a license so the business can get lending, Biggs said. "But Fire Services writes back, saying OK here is a provisional permit, but they cannot open until they get a final approval," he said.
Some, including Travel Channel’s Bizarre Foods host Andrew Zimmern, feel small farms may play an important role in St. Croix’s future economy, both for tourism and for local consumption. But farmers too face permitting problems and hurdles.
"From the perspective of the farmers, the acquisition of land clearing permits is too lengthy and costly," Assistant Agriculture Commissioner Luther Renee said. "To address some of farmers’ challenges, the VIDOA has had discussion with DPNR and Property and Procurement to streamline the land clearing Earth Change Permit process," he said.
No votes were taken at the information gathering hearing. Present were Buckley, Capehart, Young, Sens. Myron Jackson, Nereida "Nellie" Rivera-O’Reilly, Shawn-Michael Malone, Clifford Graham and noncommittee members Gittens and Sen. Terrence "Positive" Nelson.
