ECIDA Seeks Federal Approval to Broaden Its Loan Product Offerings
FOR IMMEDIATE RELEASE Media Contact:
July 18, 2011 Sharon Linstedt
Travers Collins & Company
Buffalo, NY - The Erie County Industrial Development Agency and Regional Development Corporation boards of directors today approved a revised slate of loan programs aimed at serving a broader range of emerging and expanding businesses.
As part of the process to have its loan programs re-certified by the federal Economic Development Administration (EDA), the ECIDA and RDC are seeking to add new loan categories targeting non-traditional industries and better serve start-up businesses.
"When the ECIDA made the first loan in 1979, our clients were primarily larger industrial companies with similar needs in terms of loans and tax abatements," said ECIDA Chairman Philip C. Ackerman.
"The development marketplace has changed dramatically and it's critical that our products reflect that shift. We want to be able to lend a hand to everybody, from manufacturers employing hundreds to one-person, high-tech shops needing money for R&D and talent attraction to grow. We need to be more creative and more flexible to accomplish our mission," Mr. Ackerman said.
The chairman noted 70 percent of local companies employ 10 or fewer staffers and there is a growing number of smaller minority- and women-owned businesses. Also many entrepreneurs have marketable products and businesses with real potential, but don't qualify for traditional bank financing or agency loan programs.
Under the updated Loan Administration Plan that will be submitted to the EDA, the agency's $23 million revolving loan fund would be divided into three overall loan categories: Basic, Patient and Strategic.
- Basic: Approximately $14 million (or 60 percent of loan fund) would be directed to this 'traditional' loan program geared to large and established businesses able to obtain matching bank loans. Payment period would run up to 10 years, and loan amounts would be capped at 50 percent of project costs.
- Patient: Aimed at companies seeking non-traditional financial aid, this loan category would include: micro-lending, minority entrepreneur, and R&D and innovation-based borrowers. Payment terms, loan amounts, and the amount of a project to be funded would vary depending on the type of business. Roughly $4.6 million (or 20 percent of loan fund) would be allocated to these lending programs.
- Strategic: This set of loan programs would include: Business Attraction (money to bring new companies to Erie County), Second Look (declined because they don't quite meet bank criteria) and Key Management (funds to attract critical personnel needed for a business to grow) categories. Loan terms would be variable and RDC could fund up to 100 percent of need. Approximately $4.6 million (about 20 percent of total loan fund) would be dedicated to Strategic lending.
"This updated slate of lending options brings together types of loans that have been our bread and butter for over 30 years, several of the newer products we've created in recent years, and some innovative tools to aid business growth in entirely new ways," said ECIDA COO Al Culliton.
"We are very hopeful the federal EDA will embrace these fresh ideas so we can be more nimble in our assistance," Mr. Culliton added.
The updated Loan Administration Plan was developed over the past six months through a process of internal brainstorming, meetings with economic development partners and focus groups which included a dozen banks and credit unions, eight small business advisory organizations, five law firms and two accounting firms.
Depending how soon the loan plan amendments gain federal approval, the new financing options could be available as early as this fall.