Dennis Heuer Jr. was ready to pack it in. He was that frustrated.

Heuer had put together a niche business in a gritty industrial section of Buffalo. The business, HEI Recycling Inc., is hardly the type of operation that grabs headlines. Started in 2007, the Dorothy Street company takes industrial "leftover" plastic parts and recycles them into reusable pellets. Its client list includes Rich Products, Multisorb Technologies and General Motors' Powertrain plant.

Heuer was ready to expand, but he was getting a cold shoulder from traditional lending sources. The conservative lending environment was working against him.

"I was at the point of throwing my hands up," he said.

Instead, he hooked up with the Erie County Industrial Development Agency, which put together a $300,000 loan package for the working capital he needed to expand.

The loan was approved in April.

Since then, HEI Recycling has added seven workers for a total of 31. It also picked up some new clients, including Catholic Health System and Crescent Manufacturing,

"It saved our business," Heuer said.

The IDA, late last year, created the Business Stimulus Loan Fund for companies such as HEI - small firms that want to expand but are unable to secure working-capital loans from banks and other financial institutions.

Al Culliton, chief operating officer of the ECIDA, said during any given year, the agency reaches out to as many as 2,000 local companies. Most are small, he said.

Culliton, a former banking executive, hears a common refrain from many of those with which the IDA interacts - they can't get financing packages from banks.

"Many companies in Erie County are having trouble finding financing," he said. "Especially, those smaller ones who are without household names. Money is that scarce."

In the case of HEI Recycling, he said, the company has not only grown but it made an effort to hire workers from its Lovejoy District neighborhood. Lovejoy is one of Buffalo's more economically challenged neighborhoods.

"In that regard, it is a win-win for the economy by virtue of a company expanding and the community because of the people they hire," Culliton said.

The IDA is being judicious with its loans under the new program, he added. Companies will be vetted. Due diligence will take place.

Working capital loans, especially in this economy, are tough ones to judge.

"What we needed was operating cash to grow, and that's not something banks are comfortable with," Heuer said. "It would have been different if we wanted to buy a piece of equipment or a building, but we needed funds to increase our ability to make money. The ECIDA immediately recognized our potential and what we needed."

The agency isn't stopping there.

It's seeking the state's go-ahead to approve a series of loan programs governing everything from large businesses to mom-and-pop operations. The programs are part of a $23 million revolving loan package being crafted by the IDA.

"The development marketplace has changed dramatically, and it's critical that our products reflect that shift," said Phil Ackerman, ECIDA chairman.

The genesis of the Business Stimulus Loan Fund that aided HEI Recycling came from Erie County Executive Chris Collins.

Collins, who has owned or started more than 13 local companies, knows firsthand how difficult it is to secure working-capital loans. He has been down that road himself during his private-sector days, and it wasn't pretty, he said.

"It has gotten worse," he said. "Credit standards are being locked down by banks. It doesn't matter who you are."

The irony, according to Collins, is that for many small companies to grow, they need access to working-capital loans. The loans rarely translate to companies hiring hundreds of workers, the county executive said.

"When you are talking about small businesses, it's five jobs here or two jobs there," Collins said. "But small business is our backbone.

"You tell me: Is there any small-business owner out there who doesn't want to grow his business?"

He said he hopes the new IDA program can serve as a bridge for local companies. Early returns, using HEI Recycling as an example, show it is heading in the right direction.

"God bless us if we can find those silver-bullet projects, but to me, this region's growth should be tied into the strength and well-being of our small businesses," Collins said. "Prove me wrong, but I believe the catalyst for local growth comes from small businesses."