Development Program Improves Terms Thanks to lower equity requirements and increased funding, it's now easier for local businesses to get state help for expansion projects.

by Tim Mekeel, staff writer Intelligencer Journal/Lancaster New Era; July 7, 2009

 

Even during a recession, David K. Nikoloff points out, some
manufacturers are looking to expand.

Now his organization has a better chance of persuading them to do so
in Lancaster County.

That's because a key financing program, handled here by Nikoloff's
Economic Development Co., has improved its terms on loans for
Lancaster County projects.

The EDC received word of the Pennsylvania Industrial Development
Authority's changes, including lower equity requirements and greater
funding levels, on Friday.

"We've become a more attractive mortgage loan source than ever
before," said Nikoloff, EDC president.

"In these current economic times, given the uncertainty in the
financial markets even now, these will be a tremendous benefit that
we can offer to local manufacturers and industrial concerns," he
said.

The revamped terms, which took effect July 1, vary by the size of
the firm and the location of the project.

In the past, PIDA funded up to 30 percent of a project's land and
building costs.

But now, small businesses (having up to 49 employees) doing city
projects can get PIDA financing for up to 70 percent of those costs.

Large businesses doing city projects can get PIDA financing for up
to 60 percent.

Outside the city, small businesses can get PIDA financing for up to
50 percent; large businesses remain at up to 30 percent.

While boosting the funding level, PIDA has cut the borrower's
minimum equity requirement to 10 percent from 20 percent.

These adjustments should make PIDA loans far more appealing to
businesses, especially ones with modest projects, said Nikoloff.

However, due to the recent uptick in interest rates, PIDA has
boosted its interest rate on its loans from 3 percent.

PIDA loans for projects in Lancaster city now carry a 3.75 percent
rate. Outside the city, the rate is 4.75 percent.

However, PIDA still offers a fixed rate for 15 years. It also still
will provide as much as $2 million. It continues to handle only new
projects, not refinancings.

PIDA loans typically are done as second mortgages to conventional
bank loans.

In recent years, EDC has handled only two or three PIDA-funded
projects annually, generally large undertakings, Nikoloff said.

They include expansions by R.R. Donnelley, Kunzler & Co., High Steel
Service Center and the move downtown by Auntie Anne's.

PIDA can finance projects by manufacturing and industrial concerns,
advanced technology firms and corporate headquarters projects.

E-mail: tmekeel@lnpnews.com

copyright ©2009 Intelligencer Journal/Lancaster New Era. Used with permission.