Patrick Plans Loan Fund For Small Businesses

Gov. Deval Patrick convened an economic summit of more than 100 business and policy leaders on Tuesday, with the hope of generating new ideas to lift the state out of recession — including a plan to create more funding for small businesses.

The governor said he brought the public and private sectors together to help build on his existing economic recovery plan.

"We talked about our economic strategy for growth, based on education, on innovation, on infrastructure investment, on regional equity and regional focus," he said.

Much of that focus was on encouraging small businesses in Massachusetts, which lead to one of the few concrete proposals to emerge from the summit: The creation of a new capital fund for small- and medium- sized firms. Those companies are expected to be a major source of job growth over the next year and a half.

But Patrick said he doesn't yet have details on the size of the fund and who will provide the capital.

Still, business leaders who were there are enthusiastic, although they do point out that health insurance costs are also a significant impediment to expansion in the state. Massachusetts law currently prevents small businesses from pooling together to buy health insurance at rates usually available only to larger companies. The administration is now considering eliminating that regulation.

"There's going to be some people who feel differently about it, but we think we can make the case that as a matter of fairness, what we're really talking about it is providing small businesses is the opportunity to get the same kind of deals that large companies are getting today," Housing and Economic Development Secretary Gregory Bialecki said.

State Republicans criticize the relatively few details made public after the closed-door summit. Senate Minority Leader Richard Tisei said in a statement that it was "nothing more than another stop on Governor Patrick's re-election campaign."

In fact, half of the summit's organizing committee have donated to Patrick's campaign in the past. Also conspicuously absent: A key member of the financial arm of state government. When asked why State Treasurer Timothy Cahill wasn't at the event, Patrick had no comment. Cahill is running for governor as an independent candidate.

Organizers also acknowledge that the summit does little to ease state's short term economic distress. But Patrick said that over the next 90 days working groups will further flesh out their proposals. Northeastern University Economics professor Barry Bluestone believes that's what will position the state for long term recovery.

"This is a way for us to get together and say, 'Ok. We know this isn't going to go on forever. Let's expedite as fast as possible a recovery, and what role can the state play,'" Bluestone said. "And that's what I think was most powerful here. There was a sense of optimism in this room that I have not seen for two years."

But as Patrick is expected to announce $600 million in budget cuts Thursday, Bluestone said he understood if people outside the summit room are more pessimistic.