We'll Bend Over Backwards to Help Get You Financing!

Pennsylvania and the Greater Berwick Area pride themselves on going the extra mile to give businesses and their employees the financial help they need to make it in today's economy.

That's why an incredible amount and variety of incentive programs exist to help companies compete whether relocating or expanding their facilities or upgrading the skills of their employees.

One program that BIDA has found to be particularly helpful is administered by the Pennsylvania Economic Development Financing Authority (PEDFA).

PEDFA

Objectives and General Information

The purpose of the Pennsylvania Economic Development Financing Authority (PEDFA) is to provide access to cost effective capital for growing Pennsylvania businesses. PEDFA finances business projects by issuing both tax-free and taxable bonds, selling them to investors and lending the proceeds to eligible businesses. PEDFA finances several projects at one time in a composite bond. In this way, the fixed costs of issuing the bonds are spread over more projects.

The application should include a local bank's letter of intent to guarantee the loan. This financial guarantee is used to assure that PEDFA bonds are highly rated, attractive to investors and have the lowest possible interest cost for the borrower.

Tax Exempt Program Guidelines

Eligibility

Eligible projects are manufacturing, exempt facilities and non- profit entities. Allowable costs include land (acquisition, site preparation, legal and other costs), building (acquisition, construction, rehabilitation and other related costs), and equipment (acquisition, delivery and installation).

The minimum loan size for a manufacturing project is $400,000 and the maximum is $10,000,000. Non-profit entities and exempt facilities are not subject to a loan ceiling. Job creation and/or preservation are an essential part of a project. Manufacturing projects are required to increase one job for each $50,000 of loan proceeds. Exempt facilities projects must create at least five new jobs while non-profits must create at least 20 new jobs.

Interest Rate and Term of Loan

Loans can initially carry either a fixed or variable interest rate. In addition, those loans, which begin with a variable rate, can be converted to a fixed rate at the election of the borrower. The term of the loan is a combination of the financed assets: Real estate, up to 30 years; equipment, up to 120% of its depreciable life.

Fees

Related costs include the cost of issuance (approximately 2.5% of the principal amount of the bonds), credit support costs (.5% for the master bank; 1% for the participating bank), and miscellaneous costs (approximately .3%). The fees compute from approximately 75% to 80% of prime for variable bonds and 90% to 95% of prime for fixed rate bonds. BIDA charges a fee of .2% or $1500.00, whichever is higher.

Conventional Bond Program Guidelines

Eligibility

All business projects, other than certain residential units, are eligible for conventional bond financing.

Eligible costs include land (acquisition, site preparation, legal and other costs), building (acquisition, construction, rehabilitation and other related costs), equipment (acquisition, delivery and installation) and working capital (inventory, supplies, labor and taxes) for up to 15 years. Again, the interest rate may be fixed (varies between 90% and 100% of the prevailing prime rate) or variable (varies between 70% and 80% of the prevailing prime rate). While the loan is in the variable mode, the borrower can prepay principal without penalty; however, a penalty is charged if fixed rate loans are prepaid.

Fees

BIDA charges a fee of .2% or $1500.00, whichever is higher. Additionally, the total program cost for a PEDFA bond, including issuance costs, credit support costs and miscellaneous is approximately 90% to 100% of prevailing prime rate for variable bonds and between prime and prime plus 2% for a fixed rate bond.

More Funding Opportunities.

The following are some of the other popular funding programs aimed at helping grow businesses in our region:

Customized Job Training (CJT)

This state grant program reimburses Pennsylvania employers up to 100% for certain trainer's expenses. CJT funds can be used for consumable materials and supplies, approved contracted services, instructional costs and relevant travel costs for instructors.

Job Creation Tax Credits (JCTC)

This state program offers employers a $1,000 tax credit per full-time job, per year. A business may claim credits only after a job has been created. Jobs must be created within three years from the start date and all tax credits must be claimed within five years from receipt of the tax credit certificate. To be counted as new full-time employees under the JCTC program, new employees must earn an average hourly rate of at least 150% of the federal minimum wage, excluding benefits.

Keystone Opportunity Zones (KOZ)

Eligible businesses that move into a KOZ are exempt from paying a variety of state and local taxes including local real estate taxes and gross receipts taxes, as well as Pennsylvania 's capital stock and franchise tax and corporate net income tax, through 2013.

Local Economic Revitalization Tax Assistance Act (LERTA)

Several municipalities, school districts and counties in Penn's Northeast offer real estate tax abatements on improvements for certain commercial and industrial projects. Some of these communities offer 100% abatements for ten years. Others tie their abatements to the cost of construction (i.e. one year of abatement for every $1 million of construction). Still others offer graduated abatements for up to 10 years. Contact the economic development organizations that serve the counties in which you have interest to learn where the LERTA program is active.

Machinery and Equipment Loan Fund (MELF)

Low-interest loan financing to acquire and install new or used machinery and equipment or to upgrade existing machinery and equipment. Maximum MELF loan is $500,000 or 50% of the total eligible project cost, whichever is less. MELF term generally ranges from three to seven years. Interest rate is fixed for the entire term and can be as low as 3%. Borrower must create or retain one full-time job for every $25,000 borrowed.

Opportunity Grant Program (OGP)

This Pennsylvania Department of Community and Economic Development (DCED) program provides outright grants to employers that create a substantial number of new jobs. Grant funds can be used for a variety of standard business expenses including job training, construction, the purchase of machinery and equipment and working capital. A company that receives an Opportunity Grant Program award must, within three years, meet certain job creation requirements. The company's new hires must receive a base pay of at least 150% ($7.73/hr.) of the federal minimum wage, excluding benefits, in order to be counted towards the employment requirement.

Pennsylvania Industrial Development Authority (PIDA)

Low-interest loan financing through Industrial Development Corporations for land and building acquisition, construction and renovation, resulting in the creation or retention of jobs. PIDA rates can be as low as 3% interest and are fixed for the entire term of the loan, which can not exceed 15 years. PIDA will finance up to 40% of the total real estate project cost (up to 50% in certain circumstances) with a maximum loan amount of $1,250,000. PIDA will lend up to $1,750,000 to companies located in certain distressed communities or special development zones. A company that benefits from a PIDA loan must create one full-time job for every $25,000 borrowed. Eligible companies include manufacturers, distributors, most other industrial companies and certain large office companies. Retail and most commercial businesses are ineligible.

Small Business First (SBF)

Funding for small businesses, including: low-interest loan financing for land and building acquisition and construction; machinery and equipment purchases and working capital. Maximum loan amount is $200,000. Program will fund up to 50% of total eligible project cost. Interest rate is fixed for the entire term, typically at 3%. Terms are as follows: real estate up to 10 years, machinery & equipment up to seven years, working capital up to three years. One full-time job must be created or retained for every $25,000 borrowed.

Workforce & Economic Development Network of PA (WEDnetPA)

Qualified companies can receive free "basic skills" and "information technology" training through this innovative state program. An alliance of 14 State System universities and several major technology centers makes the training available. For more information on WEDnetPA, including what qualifies as basic skills and information technology, visit: www.wednetpa.com/about.html

WorkForce Investment Act of 1998 (Title 1, Subtitle B)

A federal program that provides job training to eligible individuals. Through an On-the-Job-Training (OJT) component, companies can be reimbursed for up to 50% of wages paid to eligible trainees during the training period. The amount of time included in the training period varies with the difficulty of the job, which is usually determined through the assessment of skill levels found in the Dictionary of Occupational Titles. Program eligible employees include, but are not limited to, those who are economically disadvantaged and those who have been dislocated due to a plant closing or mass lay-off. Local Workforce Investment Boards determine the amount of grant funding to be awarded to eligible companies. For more detailed information and matrixes of state business incentive and economic development programs available, please visit here.