Elgin bank has $6.1 million in federal money to boost lending

Federal money meant to help small businesses expand has made its way to Elgin. First Community Bank received $6.1 million from the Small Business Lending Fund — money meant to facilitate job creation and spur economic growth.The Treasury Department disbursed the last of its $4 billion in funding to 332 banks across the country last week. First Community Bank made the cut for funding last month and already has begun lending it.#147;The way the program is structured, it#146;s in our best interests and the community#146;s best interests to get that money lent out,#148; said Tom Johannesen, president of First Community Bank.According to the Treasury Department#146;s website, the dividend rate on the lending fund money will either decrease if banks lend it quickly, or increase if they hold onto it.Johannesen said the goal is to increase lending to small businesses by more than 10 percent. But #147;small business#148; means one with sales of up to $50 million, which is the vast majority of Elgin businesses. And for businesses to qualify for the loans with First Community, they must meet all the same standards the bank has always set. #147;This is not a government-guaranteed loan program,#148; Johannesen said. #147;A lot of people that have called think we#146;re disbursing funds on behalf of the government. We are not. #147;It#146;s meant for healthy businesses that have a need to expand or a need to add employees.#148;Xavier Montemayor, CEO of 4M World Technologies, disagrees with First Community#146;s lending plan. Montemayor inquired about the lending fund money, hoping for a loan to help expand his technology distribution and marketing company. Montemayor was told his business plan didn#146;t meet the underwriting requirements for the loan.The Treasury Department issued a statement about the lending fund, saying small business owners had #147;faced disproportionate challenges in the aftermath of the recession and credit crisis, including difficulty accessing capital.#148; The release went on to say the lending fund helps small businesses meet that challenge. Montemayor said if banks like First Community do not lower their lending requirements the people who get the loans will not be the ones targeted by the program.#147;If they#146;re healthy then the parameters of being negatively impacted by the economy or credit crisis are not applicable,#148; Montemayor said. Johannesen said the bank wants to help business owners but ultimately suffers the consequences when loans are not repaid, whether it#146;s money from the government fund or not. Business owners can apply like they would for any other loan from First Community Bank.