Economic development 'too good to be true'

Local businesses tout revolving loan program

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It’s been a dozen years since Freedom Bank president Don Bennett presented the idea of a revolving fund for economic development to the Columbia Falls City Council.

Since then, the fund has received $1 million in Community Development Block Grant seed money from the Montana Department of Commerce and provided $2.1 million to local businesses for economic development.

Tina Oliphant, vice president of finance for Montana West Economic Development, introduced seven local businesses that benefited from the revolving loan program during the Columbia Falls Area Chamber of Commerce’s Feb. 11 monthly meeting.

Each business owner praised the loan program and MWED for its assistance. Several said the experience helped them make better business plans.

The loan program is similar to others around the U.S. It provides gap financing for businesses with good ideas that cannot find conventional loans from banks, Oliphant said.

“The trick is to get them started,” she said.

The state provides local communities with the money to start the loan program, but when the money is paid back, it stays with the community to be loaned out again. One requirement is that the money is used to increase employment, she said. MWED manages the money.

“When the idea was first brought to the Columbia Falls City Council in 2002, city manager Bill Shaw said it ‘sounded too good to be true,’” Oliphant said.

Gary Byers, owner of Creative Sales, a plastic injection-mold business on U.S. 2 south of Columbia Falls, was the first recipient of a loan in the program. He accelerated payments on the $400,000 loan, paying it back within a year, and later took out another $220,000 loan, Oliphant said.

Creative Sales, which makes knife sharpeners, the Big Bobber floating cooler and other products, has grown from 18 workers to 32, Byers said. His 36 product lines are sold around the world, and he also does custom work for clients.

Western Building Center general manager Doug Shanks explained how his company borrowed $250,000 from the revolving fund in 2007 to build a truss plant in Columbia Falls.

It was the tail end of a construction boom in the Flathead, however. The truss plant opened in 2008 just as the economy moved into a deep recession and “fell off a cliff,” Shanks said. WBC could make its payments on the loan, but it struggled to increase employment.

As economic conditions improved, employment in the 45,000 square foot building increased to 36, with an annual payroll of $1 million. WBC now purchases 2.5 million board-feet of lumber per year for the truss plant, mostly from F.H. Stoltze Land & Lumber — about 85 semi-truck loads, Shanks said. They also spend about $40,000 a month on fuel delivering completed trusses to job sites, he said.

In 2012, WBC applied for an $800,000 loan from the revolving fund for its SmartLam project, which manufactures cross-laminated panels for the oil drilling industry. The state, however, earmarked its CDBG money for Eastern Montana that year. WBC applied again and received a $400,000 loan last year.

The SmartLam plant had been very successful, Shanks said, growing from $250,000 in sales in 2012 to $1.8 million last year. The plant now has 18 workers, and WBC may have to relocate the truss plant.

Greg Fortin, a backcountry climbing and skiing guide, recently used a revolving fund loan to remodel a building in downtown Columbia Falls that once served as a grocery store in 1892 — “what some people would call blight,” he said — into his River Rock Hostel.

“More than 5,000 bicyclists pass through this area each year,” he said. “Columbia Falls is truly the gateway to Glacier Park.”

He noted that his guests eat at local restaurants, use local laundry facilities and generally benefit the local economy.

“I bought $1,000 worth of sandwiches for my guests,” he said.

Shane and Hilary Hutcheson, co-owners of Outside Media, a marketing and public relations firm on Nucleus Avenue, used money from the revolving fund to buy Trout TV, a fishing show that is broadcast three times a week on the local NBC station.

Hilary is the co-host on the show. When the show’s owner, Bob Asbury, indicated he wanted to let it go, the Hutchesons decided to buy it.

Will Schmautz explained how a revolving fund loan helped grow his company, Nomad Global Communications. Employment at the 11-year-old company, which builds mobile command centers, has increased to 90 employees. Nomad could hire 50 more, thanks to a new contract to provide 42 units to the National Guard, he said.

“We expect some great growth in the next year,” Schmautz said.

The increase in production has changed how Nomad operates, Schmautz said. But being able to complete projects faster than the competition also helped them land a contract with a nuclear power plant. Because of the Fukushima Daiichi nuclear disaster in Japan, each of the nation’s 98 nuclear plants is now required to have new emergency communication equipment, Schmautz said, opening up a new line of customers.

Craig Ruch used a revolving fund loan to increase capacity at his Armor Anodizing business. He said he started the business about three years ago and soon found himself swamped with orders after he turned to the firearms industry. His workforce has grown from three to 12 employees.

Ray Negron has been in the cafe and catering business for 37 years and wanted to consolidate his various businesses at one location — Cimarron Cafe and Catering’s restaurant on the U.S. 2 strip in Columbia Falls. A personal medical crisis, however, complicated impacts from the recession, making times even tougher.

“We restructured, and we’re stronger for it,” he said. “It looks like a good summer ahead.”