Small Business ‘Incubator’ Opens on Official Basis

One of California’s first municipally operated small business incubators--a center devoted to helping the little guy grow--will officially open its doors this morning..

The 21,000-square-foot Business Enterprise Center, operated by Santa Ana’s Community Development Agency, is reserved for occupancy by young companies that will benefit from rent subsidies and free clerical help, conference rooms, office machinery and management consultations provided by the city.

Many believe the incubator concept originated in the late 1950s when the ailing smokestack industries of the East and Midwest left shells of manufacturing plants that were renovated, often with government financing, for use by start-up firms.

Over the past two years, the number of small business incubators in the nation has increased from 26 to 161 as state and local governments have recognized such programs as a means of helping companies become successful so that they can provide an increasing number of jobs and so that the local areas can benefit from increased commerce.

In the Santa Ana incubator, “we’re trying to help (new businesses) by lowering their overhead so they can hone in on their business activity,” said Dan Mejia, manager of the facility on the corner of Santa Ana Boulevard and Poinsettia Street.

Additionally, Mejia said the City Council recently approved funding of a small loan plan for the building’s tenants who may need minimal amounts of start-up capital.

A typical loan would be for about $5,000, with a below-market interest rate, he said.

Santa Ana officials believe that, in return, the businesses they’ve nurtured will provide job opportunities for the area’s unemployed and eventually “graduate” to unsubsidized locations throughout the city, said Mejia, previously an employee of the Small Business Administration for seven years. The maximum stay for any company, he said, is three years.

The city has approved leases for three companies that received favorable recommendations from the seven-member board of directors of the Economic Development Corp., a nonprofit organization that acts as an adviser to the city on issues related to the business incubator.

Lou Silver, owner of Luer Enterprises, a year-old uniform supply company, said the benefits of locating in the building are “more than the savings on the lease costs,” which she estimated to be between 50% and 75%.

“It’s an opportunity to increase my business on an on-going basis,” she said, referring to the management seminars and contact offered by city, county and state officials.

Within the year, officials expect to house 15 to 20 light industrial or service-oriented firms in the $1.3-million building that was partially funded by the federal government. The EDC’s board of directors has been holding regular 7:30 a.m. meetings to screen applicants for space in the center.