Asian community benefits from Treasury’s Small Business Banking Partnership
Treasurer Steven Grossman toured Adcotron Inc, an Asian female owned manufacturingcompany, and a recipient of a $350,000 loan made by The East West Bank leveraged through the Treasury’s Small Business Banking Partnership (SBBP), in South Boston on August 29. Adcotron, a woman and minority-owned enterprise, offers a unique case study, and the loan sends out a signal to the Asian community that the Commonwealth is open to do business.
“SBBP levels the playing field, and this event encourages customers who may be tentative to apply for a loan,” said Treasurer Grossman, recalling a round-table discussion that he held in Chinatown in 2009, when Asian business owners expressed concerns about lack of technical assistance and barriers to market and capital access, “SBBP’s fundamental principle is to keep loans in Massachusetts in order to serve small businesses. [It] has been a powerful catalyst in bringing back business.”
Adcotron, a contract manufacturer of electronics and mechanical devices, nestled in the Marine Industrial Park in South Boston’s new Innovation District, taking up 35,000 square feet of space. Agnes Young, the CEO and founder of Adcotron, was raised and educated in Hong Kong. The full-service manufacturing company has grown from 15 to 70 employees and now caters primarily to the medical, defense/homeland security, telecommunications, and alternative energy sectors.
The loan from East West Bank will be used on leasing additional space and hiring 10 new employees to expand business.
“With the loan, Adcotron is more certain about its competitiveness,” said Young.
The Small Business Banking Partnership moves Treasury cash reserve funds typically held by large national and international financial institutions and deposits them in amounts of up to $10 million in Massachusetts banks. In exchange for the infusion of new deposits, the banks sign a Memorandum of Understanding (MOU) signaling their intent to enhance their loan portfolios to small credit-worthy Massachusetts businesses. To date, the Small Business Banking Partnership has loaned to 48 banks and generated 2500 new loans worth $360 million.
The East West Bank is one such bank that signed a Memorandum of Understanding to enroll in SBBP. According to Johnny Ip, Senior Vice President of East West Bank, loan offers are extended to small businesses based on consideration of 4 C’s: character, cash-flow, collateral, and capitalization. In addition, he examines whether the business is honest, credit-worthy, and a good corporate citizen. Adcotron certainly fits the bill.
“Adcotron is a success story. It is about an immigrant fulfilling her American dream. With the loan, Adcotron will be able to create a ripple effect in Boston’s economy,” Ip adds. According to him, another four or five small businesses are also seeking partnership with the East West Bank.
All deposits that the Treasury makes in these community banks are protected through either insurance or collateral, and the interest rate on the money is comparable to what the Commonwealth receives at out-of-state financial institutions.
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