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July 2009
Funding Program and Benchmark Interest Rate Changes
State Funding Programs Announce More Changes - First Industries Fund (Agriculture) Closed For Year
EDC Finance Corporation received notice during the month of June that the very popular First Industries Fund Agriculture economic development lending program received an overwhelming request for funding during the month of May, which caused the program to temporarily suspend the acceptance of applications. Initial changes to the First Industries Fund Agriculture program where announced in the June EDC Finance E-News, but shortly thereafter a "run on the program" caused the remaining allocation available for the year to be committed to projects throughout the Commonwealth.
The Department of Community and Economic Development announced that the program will replenish its lending capital through the remainder of 2009 through loan repayments of principal and interest, with the program expecting to reopen in January 2010. When the program reopens, program coordinators estimate anywhere from $11 million to $14 million annually will be available to fund new agriculture projects.
EDC Finance will continue to provide updates on the status of the First Industries Fund Agriculture program as information is made available. Please note that the First Industries Fund Tourism program still has available capital to lend and is not impacted by the decision to suspend agriculture applications. Tourism projects looking to utilize First Industries Fund for their projects may still call EDC Finance to discuss project details and funding options.
State Changes Benchmark Interest Rate
In an effort to have several state business lending programs provide an interest rate that reflects current market conditions, the Department of Community and Economic Development announced in late June that their program interest rates will be based off a benchmark rate of the 10-year United States Treasury rate. Below are the key points of interest regarding the benchmark change:
• Programs impacted are: Small Business First, First Industries Fund, Machinery & Equipment Loan Fund, and the Pennsylvania Industrial Development Authority
• All interest rates will be set at the weekly 10-year United States Treasury Rate +100 basis points at the end of each quarter (except certain Lancaster City, KOZ, KIZ, and brownfield PIDA projects that will not add basis points to the benchmark)
• All interest rates will be fixed at the time of loan application
• Interest rates will be updated quarterly on July 1st, October 1st, January 1st, and April 1st.
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