After more than a year without success, the Santa Maria business attraction and retention loan program may finally get some use.

The Santa Maria City Council is poised to approve the first application for a business-expansion loan to New Life Painting Inc.

The company, which has been in business for 28 years, is expanding into the remodeling market with the purchase of a Dream Maker Bath and Kitchen franchise.

Owner Charles Winkles said he plans to use the $74,650 loan as working capital and to put in a kitchen and bathroom showroom. His current business is at 1279 W. Stowell Road, suite F.

The council meets Tuesday at 6:30 p.m. in City Hall, 110 E. Cook St.

The $1 million business attraction and retention loan fund was started in 2005 using general fund money generated by the sale of surplus water. The program is administered by the Economic Development Commission with the help of Coastal Business Finance to review and evaluate loan applications.

The loan stipulates a 6-percent interest rate and repayment over six years, according to the council staff report. Additionally, collateral of a second deed of trust on the company's commercial building is required.

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Winkles expects success with the expansion because kitchen and bath upgrades enhance a home's value, and with Dream Maker Bath and Kitchen customers can take the headache out of a home remodel.

Winkles' expansion plans were brought to Coastal Business Finance as a possible loan candidate by officials with Heritage Oaks Bank, who are also lending money to the project, said Brian Kearns vice president and executive director of CBF.

“It's a nice, promising expansion for an existing business in the area,” Kearns said.

Winkles employs 14 people but expects to add more.

Part of Kearns' plan to raise awareness of the loan program is outreach to lenders in the area.

Though city officials are eager to see more loan applications make it to the council for consideration, not all businesses that are interested qualify.

Sue Terry, who purchased the 15-year-old company Electronic School Supply a couple years ago, said she began the application process with CBF but was informed that she is not eligible at this time.

Terry said the company, which builds custom kits for engineering labs at colleges nationwide, was struggling when she purchased it, but she hoped the city's loan could help her grow the business.

“It was a solid company but it did have money issues,” she said. “The owner had died and his wife inherited the business and had no intention of operating (it). I bought it to save it.”

She was told she did not have enough years of profit, Terry said.

Now, her plans to expand the company's Web site are on hold and she had to let two employees go, she said, but she vowed to keep the business operating.

“It's just harder,” she said. “We can't grow and expand to hire more people for another year.”

Officials have noted that the city is sensitive to lending to any ventures that may be too risky, so the expertise of CBF is being used for further review.

“We were brought in to reduce the risk,” Kearns said. “You can't eliminate risk because no one knows the future, even the best business in the world can have problems. We try to reduce the risk.”

He noted that as the program matures, the city may alter its risk assessment.

Residents may recall a series of loans the city gave to Pacific Skyway, a now defunct airline, that totaled $153,900. As of Dec. 31, $26,367, which includes interest, remained to be paid.

If Winkles' loan is approved, Kearns said, he believes more applications will be brought to the council.

Malia Spencer can be reached at 739-2219 or mspencer@santamariatimes.com.

Feb. 5, 2007