Center helped start 3,754 new Kentucky businesses. Bevin’s budget would close it.

Lesme Romero was anxious nine years ago to start a pasta business in Lexington but needed help on how to devise a financial plan and get a business loan.

Through Commerce Lexington, he was put in contact with the Kentucky Small Business Development Center administered by the University of Kentucky.

With its help, Romero now runs Bodega A Market by Lexington Pasta on North Limestone and the Pasta Garage Italian Cafe on Delaware Avenue with 15 employees.

“The Small Business Center was fantastic. I owe a lot to it,” said Romero.

The center, which has been helping small businesses in the state ranging from restaurants to funeral homes and spas for more than 35 years, may have its days numbered if Kentucky Gov. Matt Bevin’s proposed two-year state budget becomes reality.

The demise of the center would make Kentucky the only state in the nation without such a program, which is in a partnership with the U.S. Small Business Administration.

“We are extremely concerned about our future,” said Becky Naugle, state director of the Small Business Development Center which is housed in the University of Kentucky’s Center for Entrepreneurship.

Bevin last month put the center on a “hit list” of 70 programs to get “zero funding” to save the state about $85 million. He cut the center’s $612,000.

The governor also proposed a 6.25 percent cut in most state agencies because of slow revenue growth and to find money to fully fund the state’s financially strapped public pension programs.

“You have to take the money from somewhere,” said the Republican governor.

Bevin spokesman Woody Maglinger said of the proposed cut to the business center: “The most important thing we can do to improve the climate for small businesses in Kentucky is to get our financial house in order. The need to fund pensions and hold per pupil funding harmless from cuts means this is one of many programs that must demonstrate its value to continue to receive state appropriations.”

The small business center’s total annual budget is about $3.4 million. Its funding comes from federal and state government, as well as grants from the University of Kentucky, university boards and seminars and workshops.

“Without the $612,000 in state funding, we could not get about $1.7 million in federal dollars,” she said. “We could not stay open with a loss like that.”

Naugle said she understands the state’s financial woes but contends the small business program is “a good investment for Kentucky” as it provides free one-on-one consulting to help start and expand businesses.

In 2016, the center’s clients created 1,156 jobs, she said. For each dollar invested in center counseling services, she said, $9.47 was returned to the economy.

A financial study last year found that clients of the center generated $88.6 million in sales. The performance of clients yielded about $10 million in tax revenues; $5.2 million in state taxes and $4.8 million in federal taxes.

Since 1981, the center has served 85,972 clients and started 3,754 new businesses.

Most of the center’s clients have no more than 10 employees, Naugle said. The center currently finances 12 offices with about 40 employees throughout the state. The offices usually are associated with a university.

The center does not duplicate the work of the state Economic Development Cabinet, which tries to generate new jobs, said Naugle.

“We are really hands on with small businesses. I know of no other service like it.”

In his blog last week, UK President Eli Capilouto said he is talking with state legislators about the center’s work.

“The center is a fantastic resource,” said Steve Beam, who used it to open in 2011 Limestone Branch Distillery in Lebanon.

“When I was putting together my thoughts for the distillery, I needed help with my business plans. With the center’s help, we’re doing great. We’ve grown every year. I hope the state keeps it.”

This story was originally published February 16, 2018 at 4:54 PM with the headline "Center helped start 3,754 new Kentucky businesses. Bevin’s budget would close it.."