State authority slashes interest rate on business loans
In a bid to spur investment in Pennsylvania, a state authority is offering a temporary break on interest rates for loans available to manufacturers and other businesses.
The Pennsylvania Industrial Development Authority dropped its rate for business loans to a 2 percent fixed rate, officials with the Pennsylvania Department of Community and Economic Development said.
"PIDA is offering this reduced interest rate for a limited time to encourage businesses to make investments and grow jobs in the commonwealth," said DCED Secretary Dennis Davin.
The previous was 4 percent rate.
PIDA loan rates are normally set using a traditional spread above the 10-year U.S. Treasury rate. They are readjusted quarterly, and typically vary depending on the purpose of the loan, state officials explained.
"The commonwealth's action to reduce interest rates for PIDA loans gives Pennsylvania businesses a tangible, much-needed boost,” said John Lloyd, president and CEO of Mantec Inc., which provides assistance for regional businesses in the manufacturing sector.
"These loans are designed to help businesses in Pennsylvania, and we support anything that does that,” added Tom Palisin, executive director of the Manufacturers’ Association. The York-based trade group provides workforce training and development and other steps to help manufacturers meet their workforce needs.
Under state rules, The maximum loan amount under PIDA is contingent upon the business type, project cost, and number of jobs being created and/or retained as a result of the project, state officials explained.
Costs eligible for financing through PIDA include acquisition of land, buildings, machinery, and equipment, as well as construction, renovation and working capital costs.
PIDA loans generally finance up to 50 percent of eligible project costs, with matching funds from traditional lenders such as banks, equity partners, or other state financing programs.
Established in 1956, PIDA provides low-interest loans and lines of credit through certified economic development organizations for eligible businesses that commit to creating and/or retaining jobs. It also provides loans for the development of industrial parks and multi-tenant facilities.