Maryland bets on small businesses with loans financed by slot machines Early this year, Portillo and his wife approached county officials hoping to secure a loan to open an activity center that would use Lego bricks to promote education in fields such as science, construction, engineering and robotics. Despite an impressive presentation using a Lego robot and a Rubik's Cube, Portillo said the county and a local bank turned him away, noting that the business model had not been tried previously. But then his luck changed. A few weeks later, Anne Arundel's economic development agency was one of three fund managers awarded a share of the first $7.8 million generated by the state's new Volt program, which by law receives 1.5 percent of the total revenue from Maryland's thousands of lottery machines (Volt is an acronym for "video lottery terminals"). Stephen Primosch, the county's vice president of financial services, who now manages the Volt funds, immediately called Portillo. One $25,000 loan and a couple of months later, the Portillos opened the Brick House in Annapolis. Since then, they have created five new jobs and their classes are almost fully booked. "It's a great program for people like us that have a concept but nothing more to back it up except a history of hard work," Portillo said of the Volt Fund. If it wasn't for the program, we wouldn't have had as strong of a start. We wouldn't have been able to make the purchases we needed to get going. Created by law in 2007, the Volt Fund did not have enough capital to get started until last year's opening of the Maryland Live casino and entertainment center in Hanover. Under the program's rules, half of the money must be used for loans to firms within 10 miles of one of the state's casinos, and the rest can go to any small business in Maryland. This past year, Anne Arundel was allotted $3.3 million of the $7.8 million fund, while $3.5 million went to Meridian Management Group, a private investment firm in Baltimore, to distribute. The remaining $1 million went to Maryland Capital Enterprises, a nonprofit micro-lender based in Salisbury. Each can approve loans ranging from $25,000 to $500,000 with interest rates set at or below market rates, ranging from 2 percent to 5.25 percent. The 16 firms that have received Volt funding through Anne Arundel's share have retained 110 jobs and created 137 new positions, according to the economic development group. It's an unconventional use of casino revenue. Maryland officials say they are not aware of any other state using gambling money to finance commercial loans. "Sometimes it's not clear where the money from casinos winds up, and with this, they can see the direct correlation between where the proceeds are going and the benefits to the local economy," Primosch said. It isn't just traditional mom-and-pop business owners who are benefiting from the program. Roughly a third of the loans the county has made have gone to early-stage technology start-ups, which can defer payments on the loans until they hit what Pri­mosch calls a major liquidity milestone - that is, a large round of investment, a merger or an acquisition. One of those start-ups is Cwist, a content-based marketing platform for children's products, which launched in June in Annapolis. The company provides online learning activities to children and allows them to create a wish list of products they would like as a reward; upon completion, if parents later purchase that toy or game online, Cwist gets a commission. Chris Sleat, the firm's founder and chief executive, learned of the Volt program this year and secured a $100,000 loan to help his company continue to build software, monitor its services and beef up its marketing efforts. Cwist has about 3,000 families signed up online, and by this time next year, Sleat hopes to expand to 30,000. "There has long been and there continues to be a huge need on the investment side for early-stage companies like ours," Sleat said. Other technology firms financed by the program include Light Point Security, a cloud-based software security firm in Catonsville that received a $250,000 loan, and SameGrain, a mobile social networking platform based in Baltimore, which also received $250,000. "We're almost out of funding," Primosch said, noting that his department has allocated $2.8 million of its $3.3 million. More than 30 other technology firms have signed up on a waiting list, he added. In coming years, once some of the current loans are repaid, the county will be able to reinvest those funds into other Volt loans. In the short term, though, Pri­mosch is looking toward a second round of funding from the state next year. "Every year, that 1.5 percent of proceeds will come in to the account for Volt," he said. So next year, we can go back and ask for more money, and we definitely intend to.