- The Washington Times - Thursday, May 12, 2005

The District will begin an investment program next week that will provide $50 million in venture capital for small businesses based in the city.

The venture capital program, which was signed into law in fall 2003, will start Tuesday. It will provide loans or other structured payments to small companies in increments of at least $100,000 each, said D.C. Insurance Commissioner Lawrence Mirel.

“It’s a relatively small program. But if it is successful, the District can extend and repeat it,” Mr. Mirel said.

The D.C. Chamber of Commerce, which has 2,075 companies as members, already is interested in the program, said spokesman Chris Knudson. “It’s our hope that this will increase business in the District.”

Small businesses seeking the funds must be headquartered in the District to be eligible. They also must qualify as “small” under federal Small Business Administration (SBA) regulations.

The SBA generally considers a company with fewer than 500 employees or $5 million in annual sales a small business. Certain professions — including accountants, doctors, lawyers and lobbyists — will not qualify.

D.C. companies also must provide an affidavit stating that the business was unable to obtain a loan or investment from banks or other conventional providers.

And businesses must have 75 percent of their employees working within city limits.

Mr. Mirel said there are provisions for him to waive the employment and residency requirements, but he doubted that they would be used.

“This program is designed to promote local entrepreneurs. I will make sure funds go to local businesses that will affect as many local people as possible,” he said.

The financing will be done by three, regulated venture funds — Enhanced Capital Partners, Advantage Capital Partners and Willshire D.C. Partners.

The capped $50 million that will be invested in D.C. businesses came from investments by unnamed property casualty and life insurance companies, said Dana Sheppard, spokes-man for the D.C. Department of Insurance, Securities and Banking.

Insurance companies will receive a tax credit on their premium taxes in the amount of the money that was invested in the venture funds, Mr. Sheppard said.

The District won’t let that credit begin until 2009 and will stretch it over a 10 years to protect the city from losing substantial tax revenue, he said.

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