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GREENSBORO — As the application deadline nears, state officials say they’ve approved just 8 percent of the bonds allocated to the state for business development under the federal stimulus program.

The program, designed to make credit more available to businesses and more lucrative for investors, was approved in 2008 by Congress.

North Carolina’s allocation was $627.2 million in Recovery Zone Facility Bonds.

But so far, the Local Government Commission, which must approve all proposals before companies sell the bonds, has approved $53.5 million on three projects, according to commission records. Applications must reach the commission by April 15 to be considered.

Another $28 million is scheduled for review in May, a spokeswoman said.

That leaves about $400 million in earlier stages of the approval process or unclaimed.

Complicated steps for approval, including a requirement that borrowers get letters of credit from banks backing the deals before they can sell the bonds, may be limiting applications, say some people working on deals.

In Greensboro, two groups that have sought the financing have either given up or delayed their applications.

Memphis-based Urban Hotel Group, in conjunction with a group of local partners, hopes to build a 200-room hotel on South Elm Street by using $27 million from the program.

Like many companies that requested the money in December 2009, however, Urban Hotel Group is unlikely to meet its application deadline.

Although Urban Hotel Group wasn’t specific, investor George House said it can’t move forward with the request until the plan is “economically viable.” And right now, it hasn’t assembled all the pieces.

House said the group is committed to building the hotel and still is spending a lot of time working out the details. But banks and investors, in general, are demanding that developers put up more money or land than they did just a few years ago.

In addition, House believes the approval process for the recovery zone bonds is difficult to step through.

“These are complicated bonds, and I don’t think people knew the rules when they started,” House said.

Mary Nash Rusher, the county’s bond counsel, said confusion and tight credit have slowed down recovery zone projects nationwide.

“Congress created this new creature, a new method of financing,” Rusher said. “It was packaged in a bill that contained a lot of other provisions, including outright grants. So a lot of people just reading about it in, say, the newspaper thought this was another source of funding rather than a method of financing.”

The bonds made it possible for a project’s financing to be tax-exempt, but developers still have to go get the financing themselves. Credit has become harder to come by, and loans of all sorts are undergoing greater scrutiny — not a recipe for getting a project going quickly.

Rusher said it also took everyone a while to put together the machinery to get the financing out.

“It’s not like there are billions of dollars of these being done in other states,” Rusher said. “There aren’t that many being done anywhere. They’re just now beginning to trickle out.”

Another group of local developers also has backed away from using the industrial development bonds.

A group called North Eugene Partners originally asked the city to endorse its request for $1.9 million in such bonds to finance a new downtown home for Deep Roots Market.

The 9,000-square-foot building would go up in the 600 block of North Eugene Street, part of the former North State Chevrolet dealership.

Bob Isner, a member of the group, said underwriting fees, bank fees and legal fees made the bond approach impractical.

“The fees are too high,” Isner said. “We are looking at other financing. The project is still very viable. We are moving right along.”

Staff writer Donald W. Patterson contributed to this report.

Contact Richard M. Barron at 373-7371 or richard.barron @news-record.com

Contact Joe Killian at 373-7023 or joe.killian@news-record.com