Mericle Commercial Real Estate Services Search WHY NEPA LOW-INTEREST LOAN PROGRAMS Grants and low interest loans for businesses in Pennsylvania. PENNSYLVANIA FIRST PROGRAM Pennsylvania Department of Community and Economic Development (DCED) grant/loan program for companies that create/retain a substantial number of jobs. Provides funding for real estate, M&E, job training, etc… The company must pay at least 150% of the federal minimum wage. A $10 to $1 private investment match is required. The max assistance is $5,000 per job (discretionary). Businesses can receive support in the form of grants, loans and loan guarantees for job training, property acquisition, site preparation, land and building improvements, purchasing or upgrading machinery and equipment, infrastructure, environmental assessments and remediation, and working capital. Businesses must achieve one of the following standards within three years of receiving Pennsylvania First Program funding: (1) create or retain a minimum of 100 full time jobs at the project site; (2) increase their full time employment within the commonwealth by at least 20%; (3) provide a substantial number of new, full time employment opportunities within a high growth industry; or (4) create or retain fewer than 100 full time jobs at project sites that are located in counties or communities suffering from high unemployment. The program requires participants to commit to operating at the approved project site for a minimum of seven years. Full-time employees must earn at least 150% of the federal minimum wage. Loan terms can be up to 15 years for real estate and infrastructure and up to 10 years for machinery and equipment. Interest rates will be set at the time of approval and will be based on the 10-year Treasury rate. Each annual Pennsylvania First Program appropriation must leverage at least $10 in private investment for every $1 of program assistance awarded. The maximum assistance amount shall not exceed $5,000 for each job projected to be created or retained. DCED has discretion to modify this amount for special circumstances. The project may not commence prior to the approval of Pennsylvania First Program assistance without the written consent of the DCED to incur project costs. Commencement of work prior to receiving DCED’s approval will result in the project becoming ineligible for funding consideration. PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY TAX EXEMPT BOND PROGRAM (PEDFA) Tax-free bond program. Provides loans between $400,000 and $20,000,000. Helps manufacturers and non-profit 501(c)(3)s among others. Funds real estate, M&E, working capital, etc… The loan term can be up to 30-years but not more than 120% of the depreciable life of the assets being financed. PEDFA can finance up to 100% of eligible project costs but will usually loan less because the participating bank will likely require some equity. Can be in a pool or stand-alone. Companies must apply through an Industrial Development Authority (IDA) or an Industrial Development Corporation (IDC). Loan rates are typically 20% to 30% lower than commercial alternatives. The Pennsylvania Economic Development Financing Authority (PEDFA) Tax Exempt Bond Program assists in financing land and building acquisition, renovations and new construction, machinery and equipment acquisition and installation, as well as working capital. Those eligible for the PEDFA Tax Exempt Bond Program are industries such as manufacturing, energy, solid waste disposal, wastewater treatment, transportation facilities, assisted living/housing, and nonprofit 501(c)(3). The loan amount must be a minimum of $400,000. The borrower, along with its affiliates, together cannot incur more than $20,000,000 of capital costs in the city or municipality of the project during a six-year period beginning three years prior to the date of the bond closing. These capital costs include the current project costs and any outstanding tax-exempt debt. Up to $1,000,000 of tax-exempt financing, including outstanding tax-exempt debt, is allowed without regard to the $20 million capital costs limit. The loan can be up to a 30-year term but no more than 120% of the depreciable life of the assets being financed. Interest rates are generally 20% to 30% below comparable commercial alternatives. Weekly variable interest rates generally track against the Securities Industry and Financial Markets Association Index (SIFMA), a weekly municipal interest rate index that serves as the industry benchmark. For each composite pool project, the PEDFA loan amount must be in multiples of: (1) $25,000 if the loan amount is less than $1 million; or (2) $100,000 if the loan amount is $1 million or greater. There are no specified loan increments for stand-alone projects. While up to 100% of qualified costs may be funded, in most cases lenders or credit banks require a significant equity contribution. All applications must be submitted online by a local IDA or IDC, which is the “Applicant”, through the Electronic Single Application located at dced.pa.gov. PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY (PIDA) Low interest, fixed rate loans for real estate (max 15 years) and M&E (max 10 years), for manufacturing, industrial, office, and R&D firms and others. Companies must apply through a certified economic development organization. A typical interest rate in Pennsylvania in mid-2021 was 2.5%, but the rate is subject to change quarterly. Companies must retain/create jobs (up to $35,000 for retained jobs and up to $50,000 for created jobs). The max loan for real estate is $2.25 million and the max loan for M&E is $1.5 million. The Pennsylvania Industrial Development Authority (PIDA) provides low-interest loans through certified economic development organizations (CEDOs) for eligible businesses that commit to creating and/or retaining jobs. Eligible uses include warehouse and terminal facilities (must create/retain at least 25 jobs), office buildings used as national/regional headquarters, computer/clerical operations (must create/retain at least 125 jobs), manufacturing operations, research and development enterprises, and others. Eligible costs include real estate, M&E, working capital, and lines of credit. Projects involving the relocation from one part of PA to another are not eligible unless approved in advance by PA DCED. The maximum loan amount requested to finance all types of eligible costs is calculated by multiplying the number of jobs to be retained by $35,000 and the number of jobs to be created by the eligible business within three years after the closing of the PIDA loan by $50,000 and then adding those two amounts together. The maximum loan amount for land and building costs is $2,000,000 or 50% of the total eligible land and building costs. However, projects that are located in the following areas are eligible for loans up to $2,250,000: state enterprise zones, state Act 47 municipalities, federal empowerment zones, federal enterprise communities, brownfield sites, and Keystone Opportunity Zones, and Keystone Opportunity Expansion Zones. For machinery and equipment, the maximum loan amount for all eligible businesses is $400,000 or 50% of the total eligible M&E costs, whichever is less. However, an eligible business having 100 or fewer full-time employees worldwide at the time of submission of the application may count eligible land, building, and M&E costs incurred during a 12-month period prior to the date of submission of the application towards meeting the 50% match requirement. The interest rate for the loan will be fixed at the time of approval of the loan and remain fixed for the duration of the repayment term. Depending on credit underwriting, PIDA may require that the term of the loan not exceed the term of any matching lending source with a lien senior to or shared with the PIDA lien. Loans used to acquire land, buildings, or to renovate, expand, or construct a building may have a repayment period up to fifteen (15) years. Loans used for machinery and equipment acquisitions may have a repayment period up to 10 years and the term cannot exceed the useful life of the equipment being financed. A real estate acquisition, renovation, or construction project where the PIDA loan amount exceeds $400,000 will be secured by no less than a second mortgage on the property financed. Machinery and equipment acquisitions will be secured by no less than a second lien position on the equipment financed and may require additional pledged assets if in a subordinate position. Interest rates are set quarterly on January 1, April 1, July 1, and October 1 of each year using the current 10-year U.S. Treasury rate as an index benchmark. LUZERNE COUNTY’S BUSINESS DEVELOPMENT LOAN PROGRAM 1.5% fixed interest loan between $50,000 and $500,000 for real estate, M&E and working capital. The company must create one full time equivalent job for every $35,000 borrowed. An Industrial Development Corporation (IDC) must apply on behalf of company. The term is typically seven or 15 years. Luzerne County may finance up to 50% of eligible costs. In order to receive a loan under this program, the business must demonstrate a positive direct impact on the community in which it is located, on residents of that community, or on the local and/or regional economy. The applicant must demonstrate a need for assistance through the program, and commit to creating one permanent, full time equivalent job for every $35,000 borrowed from Luzerne County. A majority (51% or more) of the jobs must be taken by or made available to persons from low/moderate income families. Should the company fail to meet job creation requirements within a three-year period following preliminary approval, a penalty may be imposed. Funding will be provided for land and/or building acquisition; construction/renovation activities; purchase of machinery and equipment which is an integral structural fixture of the business; and professional and financial fees. Funding may also be obtained for working capital by manufacturing firms. Loan funds are available for eligible businesses at an interest rate of 1.5% for terms of seven or 15 years. The County may finance up to 50% of the eligible project costs, with a minimum loan amount of $50,000 and a maximum loan amount of $500,000. Loans under $100,000 will be for a maximum seven-year term. Monthly repayments of principal and interest will be required for the term of the loan. County funds must be secured by a letter of credit from a financial institution. A local industrial development corporation (IDC) must sponsor the loan application on the company’s behalf. Search (570) 823-1100 East Mountain Corporate Center 100 Baltimore Drive Wilkes-Barre, PA 18702 Contact Us SEARCH PROPERTIES WHY NEPA WHY MERICLE About Us Careers Brokerage STAY UP-TO-DATE WITH MERICLE Sign-up to Mericle's newsletter. 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