The state is trying to sweeten its loan programs for manufacturing companies. It plans to drop interest rates from 2.75 percent to 1.5 percent, for businesses who apply through the end of March to any of five programs that lend money for things like machine purchases and help attracting international buyers. The state Department of Community and Economic Development said it would also waive borrowing fees associated with the loan programs in an effort to spur business investment.
The move was prompted by a recommendation from the Governor’s Manufacturing Advisory Council, which submitted a report of suggestions to the Corbett administration last August.
Janis Herschkowitz, a member of the panel, and president of manufacturer PRL, Inc. in Lebanon County, said lower borrowing rates and fewer fees would make capital more accessible at a time when bank loans are hard to come by.
“What it is enabling us to do is go out and buy a piece of equipment that we wouldn’t otherwise normally buy,” she said. “Say we buy a CMC (computer numerically controlled) machine, then we hire two more machinists to put on that piece of equipment — getting more revenue for the product we sell into the state, and they (the machinists) are also starting to pay taxes on a personal level.”
DCED has no firm estimate of how much the temporarily lowered interest rates and waived fees could cost the state. Secretary Alan Walker said the initial cost could be several million dollars, before any loans are paid back or businesses are expanded.
“But what’s going to happen is it’s going to bring in so much more manufacturing that that will far offset the cost,” Walker said. “So we look more at more the increased revenues it’ll bring, which is six or seven to one, the ratio. So it’s a very favorable return on our investment.”
The lowered rates and waived fees will be available to qualifying borrowers applying to the DCED Machinery and Equipment Loan Fund, the Small Business First Program, the Pollution Prevention Assistance Program, and the Export Assistance Program. The Pennsylvania Industrial Development Authority, has also agreed to lower its interest rate.