State officials fired the starting gun and now economic-development officials across Central Pennsylvania are off to the races.
- In an announcement Sept. 13, the Department of Community and Economic Development unveiled the local agencies that will play a role in distributing $246.7 million to small businesses statewide under a federal program called the State Small Business Credit Initiative.
- While the government shelled out money during the pandemic to help businesses survive, the new funding is designed to help them thrive, according to Dan Betancourt, president and CEO of Lancaster-based Community First Fund, one of the organizations that will be distributing funds.
- “People are looking to expand their businesses and to buy the properties that they rent,” Betancourt said. “This provides us the capital to be able to do that.”
What’s the program: A creation of the federal government launched in the wake of the Great Recession of 2008-09 but rebooted for an economy still recovering from the disruption of the Covid-19 pandemic.
- It is being overseen by DCED. But the money will pass through local organizations before it reaches businesses.
- Organizations will get a third of their funding up front, followed by two additional tranches whose timing depends on the pace of distribution.
What’s the plan: It is still early, and several local officials said they are ironing out the details with their partners. Under the program, federal funds must be matched with local dollars.
- Here is a quick run-down on what officials were able to share as of yesterday.
Capital Region Economic Development Corp.: The agency, which covers Cumberland, Dauphin and Perry counties, partnered with the Chester County Economic Development Corp. to apply for funding, along with agencies in Berks, Bucks, Delaware and Lebanon counties
- They are splitting a state award of $20 million, with $3.8 million earmarked for CREDC, according to Ryan Unger, president and CEO of the Harrisburg Regional Chamber and CREDC. The first tranche is about $1.3 million.
- The money will go into a revolving loan fund with a goal of helping business owners who are socially and economically disadvantaged, which includes women and people of color.
- “Access to capital is always a barrier for growth for these businesses,” Unger said. “We will work with our lending partners, other nonprofits and our elected officials to try to get the word out on the program so we can make sure that all that $3.8 million reaches businesses here in our region.”
Community First Fund: The nonprofit lender is sharing in a $45 million award made to the Pennsylvania CDFI Network, a statewide group for so-called community development financial institutions.
- Betancourt said he expects Community First to make loans of between $100,000 to $200,000, funded by the lender’s existing capital and the new program.
- The program could launch in about 60 days but the revolving loan fund is likely to endure for years, he said.
- Borrowers will pay back into the fund, making money available to new borrowers.
- “Organizations that have revolving loan funds tend to keep them permanently,” Betancourt said.
EDC Finance Corp.: The Lancaster-based agency was awarded nearly $5.1 million.
- The money could help meet demand for smaller loans — less than $500,000 or so — that do not fit existing programs, such as those from the Pennsylvania Industrial Development Authority, said Lyle Hosler, vice president of EDC Finance, an arm of the Economic Development Co. of Lancaster County.
- “This tool, since we have local control of it, should allow us to make those projects more feasible going forward,” he said.
- Businesses borrowing from the Lancaster program likely will need private lenders for the matching portion, added Lisa Riggs, president of EDC finance.
- “We do think it’s going to be a beneficial tool but a complementary one, not only to what we offer but to what’s needed in the marketplace,” she said.
Life Sciences Greenhouse of Central Pennsylvania: The Harrisburg-based investment entity was awarded nearly $14.8 million to put toward equity investments in businesses.
- The greenhouse already has been identifying potential firms in which to invest, said Michele Washko, its president and CEO.
- She declined to name them but did say the greenhouse is considering an investment in one of its existing portfolio companies, Micro Interventional Devices, a Newtown-based firm that makes a device for treating structural heart disease.
- One key will be persuading other investors to join in to ensure the private sector invests as much as the public, per the guidelines of the federal program.
- “We think it’s a great opportunity to bring outside capital to complement these funds and really grow particularly the life sciences in this region,” Washko said.
York County Economic Development Corp.: The agency, which is overseen by the York County Economic Alliance, landed an award of $5 million.
- The money will go toward the Bloom Empowerment Center, a YCEA initiative that provides funding, training and other resources to small businesses, according to Kevin Schreiber, the YCEA’s president and CEO
- The center targets very small businesses, those with less than 10 people, and it has a strategic focus on businesses owned by women and people of color, Schreiber said.
- The center will establish a revolving loan fund, with the average loan likely between $35,000 and $70,000, Schreiber said.
- The Bloom center currently has capital of $1.7 million, he added. “This is a significant shot of momentum.”
- Schreiber hopes to raise matching funds from banks, corporations and philanthropic donors in York.
Were there others: Yes.
- Ben Franklin Technology Partners of Central & Northern Pennsylvania was awarded nearly $19.7 million for equity investments.
- The Cumberland Area Economic Development Corp., or CAEDC, was awarded $211,650. The agency plans to open a revolving loan fund.