One of the primary functions of economic development organizations is to provide financing for new and growing businesses that may not qualify for traditional bank loans.

Locally, most of that money comes from one of 11 revolving loan funds -- funds from which money is loaned, paid back, then loaned again to another business, keeping the dollars repeatedly circulating through the local economy.

Since its inception in 1998, Montana Business Assistance Connection has loaned out more than $10 million to businesses in Lewis and Clark, Broadwater, Meagher and Jefferson counties.

The current books show 52 unique commercial borrowers (some with more than one loan). Those businesses have borrowed a total of $5.94 million, and have paid back some $1.1 million so far.

Evan Barrett, the state's chief business officer in the Governor's Office of Economic Development, said lending money is one of the most important functions of economic development organizations.

"The loan funds that local development corporations have are funds that can make transactions happen that would not happen without that money," he said. "Eventually over time, companies get strong enough that they don't need these loans. Then you can use those dollars to roll back around again, create some (more) expansion that wouldn't otherwise happen."

Each pot of money has a separate set of strings attached. Some cash is available only to residents of certain counties or rural areas, some only to businesses with fewer than 10 employees. Some has been borrowed from various sources by MBAC itself and will need to be paid back eventually, while other money belongs to participating counties and is simply administered by MBAC.

"Prior to going to the loan committee, we figure out where a project will originate," said Sheli Jacoby, MBAC's loan officer.

While money is constantly being paid back, there's no shortage of demand for capital, and one of MBAC's ongoing challenges is securing additional funds to lend out. It's a good problem to have -- the local economy is strong, and local entrepreneurs are optimistic -- but a hinderance to growth nonetheless.

"We've hit every public well. Now where do I go to find money?" said director Sheldon Bartel. "Where do we find new sources of risk capital?"

Last year, a consortium of local banks chipped in. Five banks loaned MBAC a total of $700,000 at 4.5 percent, money that MBAC can subsequently loan to any new or existing business in the region.

Nearly 90 percent of those dollars have already been deployed.

John Harrington can be reached at 447-4080 or john.harrington@helenair.com.