State eases loan rules for E.Ky. company

State officials agreed Thursday to lower the job requirements for an Eastern Kentucky company that received a forgivable loan to expand its operations.

In August 2007, the state approved a $500,000 forgivable loan for Harlan-based Data Futures to buy hardware, software and other technology. The company develops software including LunchBox, a nutrition-management system for school systems used by cafeteria managers, and CareScope, which is used by those who provide health care to under-served groups.

In return for the loan, Data Futures agreed to maintain its 24 full-time jobs in the state and hire 20 more workers with an average annual salary of $55,000 by the end of 2009. Those jobs would have to be maintained at those salaries through the end of 2012, according to state records.

The state gave the company $250,000 of the loan in February 2008, but Data Futures later decided that because of the recession it couldn't go through with the entire expansion.

"We work quite a bit in the public sector, and budgets for public-sector industries have been impacted," said CEO Charleen Combs. "Our feeling is that we are in a time that we really need to look closely at our business model and how we're doing things to get to the most efficient operating business model that we can."

The company is now sending fewer trainers to clients to provide live training, Combs said. More of that is now done through Web sessions, she said. And with troubleshooting, the company remotely accesses clients' computers rather than doing it on-site.

In May, Data Futures repaid $123,472 of the $250,000 loan. State workers who coordinated with the company on its loan suggested the state reduce the loan to the amount Data Futures already has received and lower the job requirement to reflect the lower funding.

The Kentucky Economic Development Finance Authority agreed Thursday to make the $126,528 that the company has received forgivable, assuming that the company can create seven new jobs instead of the initial 20. The company reported 26 current Kentucky employees, so it already has created two of the seven required.

State officials also agreed to drop the average annual salary requirement by $10,000, to $45,000, and the jobs won't be required to be created until the end of 2012 instead of this year.

"We have been and are moving forward with our plans for expansion," Combs said. "We're just in a different mode than we were in a couple of years ago."

Meanwhile, a Louisville-based company that was the recipient of a $500,000 forgivable loan also saw its loan modified Thursday.

Smoothstone IP Communications was loaned the money to expand its 61-person work force by at least 20, paying an average annual salary of $67,000. Approved in January 2008, the loan has been given to the company, but it has been able to create only seven jobs that pay an average of $60,000, state records said.

The company has requested a one-year extension, which was approved, to meet the requirements of the loan.

"Smoothstone still intends to fulfill the full scope of their original plan. The company just needed additional time," Cabinet for Economic Development spokeswoman Mandy Lambert said.

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