Lancaster New Era
June 4 , 2008
By TIM MEKEEL, New Era Staff Writer

The Economic Development Co., once focused on serving traditional smokestack industries, again is reaching out to a new clientele.

The non-profit organization has started offering a type of U.S. Small Business Administration loan that can fuel the growth of all kinds of small businesses, it was announced today.

Known as “504” loans, after the SBA program’s number, these dollars can be used by hotels, stores, golf courses, dinner theaters and any other sort of small business — whether or not they have smokestacks.

The program, which the SBA describes as having attractive terms and broad eligibility, is being administered here by the Economic Development Co.’s EDC Finance Corp. subsidiary, effective immediately.

“It’s by far our most accessible program,” said EDC Finance Vice President John Biemiller. “We can do things that are out of the ordinary, compared to what we can do with a lot of state funding programs.”

Previously, EDC Finance marketed the program here, but a Chester County organization handled the loan applications and other paperwork for Lancaster County borrowers.

EDC Finance, whose duties include helping businesses apply for public funds to support their growth, traditionally has aided businesses in tapping state programs for manufacturers.

In recent years, though, tourism and agricultural projects have become part of the state-funded portfolio. EDC Finance, in turn, has extended its reach, helping numerous farmers and tourist-attraction owners secure state aid.

Now the 504 program is putting EDC Finance in another new arena. Any sort of small business — liberally defined as businesses having a net worth less than $7.5 million and net profit less than $2.5 million — can apply.

Eligible projects include real estate purchases, building construction, building renovations, equipment purchases and “soft” costs (such as design fees).

Biemiller believed that having EDC Finance administer the program here will spark greater interest among local small businesses.

In the past, local 504 loans were administered by the South Eastern Economic Development Co. of PA. It handled about 70 loans here over the past 15 years.

In order to start administering the 504 program here, EDC Finance achieved “Certified Development Company” status from the SBA.

Dave Dickson, district director for the SBA’s Philadelphia district, echoed Biemiller’s optimism that having local administration will spur demand in the county for 504 loans.

“If businesses are able to deal with local people, it’s easier on them,” said Dickson, who termed the loan program an underused and little-known resource, despite its favorable terms.

Under the 504 program, small businesses can borrow up to $4 million, depending on the project type and job impact, at a fixed rate, now 6.46 percent. The loans run 20 years for real estate projects and 10 years for equipment projects.

A 504 loan can fund 40 percent of a project’s cost, with a bank providing 50 percent and the business only 10 percent — a much smaller outlay for the business than conventional bank financing would require.

Staff writer Tim Mekeel can be reached at tmekeel@ LNPnews.com or 481-6030.


copyright ©2008 Lancaster New Era. Used with permission.