Pennsylvania and the Berwick region offer many incentives to give businesses and their employees the financial assistance they need to succeed in today’s economy.

BIDA has found a program administered by the Pennsylvania Economic Development Financing Authority (PEDFA) to be particularly helpful.

PEDFA

Objectives and General Information

PEDFA provides cost-effective financing to businesses by issuing bonds, selling the bonds to private investors, and lending the proceeds to eligible businesses. PEDFA administers both a tax exempt and a taxable bond program which can be used for land and building acquisition, building renovation and new construction, machinery and equipment acquisition and installation, designed infrastructure, refinancing and working capital. PEDFA's competitive interest rates and affordable closing costs make the financing cost effective for projects of all sizes. Depending on the size of the project, the bond may be a stand-alone bond or it may be part of our Composite Bond Pool.

The application should include a local bank's letter of intent to guarantee the loan. This financial guarantee is used to assure that PEDFA bonds are highly rated, attractive to investors and have the lowest possible interest cost for the borrower.

Tax-Exempt Program
Eligibility

Tax-Exempt bonds are bonds for which the interest earned by the bondholders is excluded from federal income tax. Since these bonds are more attractive to investors, the interest cost of Tax-Exempt bonds is restricted by federal law. For complete information, review the latest Tax-Exempt Program Guidelines.

PEDFA Taxable Program
Eligibility

Taxable bonds have a higher interest rate than Tax-Exempt bonds, but they are not subject to the same stringent tax requirements as Tax-Exempt bonds. All businesses qualified to do business in Pennsylvania except speculative activities may be eligible for taxable financing. There are also fewer restrictions on the uses of the funds. PEDFA Applications must be submitted by a local Industrial Development Authority (IDA) or Industrial Development Corporation (IDC). Please see this list of IDAs and IDCs. For complete information, review the latest Taxable Program Guidelines.

Interest Rate and Term of Loan

For composite pool projects, loan terms are up to 30 years, subject to negotiation and approval of the borrower’s letter of credit provider. Current rates for the variable loans are available upon request.

For stand-alone projects, interest rates can be variable or fixed and are determined by the underwriter or bank.

Fees

A nonrefundable fee of $500 is required at the time of the project application and is used to pay PEDFA’s expenses associated with each project. The fee will be credited against closing costs.

For composite pool projects, the PEDFA program carries annual credit enhancement, remarketing and trustee fees currently totaling approximately 0.685%.

For stand-alone projects, the Beneficial Owner/Developer should generally expect to receive annual servicing bills from the trustee, the letter of credit bank (if applicable), and the remarketing agent (if applicable). These annual fees are negotiated by the Beneficial Owner/Developer with each entity.

Closing costs for composite pool projects average 2.5 percent of the PEDFA loan amount. That estimate does not include fees charged by the Beneficial Owner/Developer’s counsel, participating bank or bank counsel. For stand-alone projects, closing fees depend on the various entities involved in the financing.

BIDA charges a fee of .2% or $1,500, whichever is higher.

Conventional Bond Program Guidelines
Eligibility

All business projects, other than certain residential units, are eligible for conventional bond financing.
Eligible costs include land (acquisition, site preparation, legal and other costs), building (acquisition, construction, rehabilitation and other related costs), equipment (acquisition, delivery, installation and renovation), refunding of outstanding tax-exempt debt as allowed by federal law, and closing costs (no more than 2 percent of the tax-exempt financing amount).

Loan terms are up to 30 years, subject to negotiation and approval of the borrower’s letter of credit provider. The interest rate is variable for composite pool projects and can be variable or fixed for stand-alone projects.

Fees

A nonrefundable fee of $500 is required at the time of the project application and is used to pay PEDFA’s expenses associated with each project. The fee will be credited against closing costs.

For composite pool projects, the PEDFA program carries annual credit enhancement, remarketing and trustee fees currently totaling approximately 0.685%.

For stand-alone projects, the Beneficial Owner/Developer should generally expect to receive annual servicing bills from the trustee, the letter of credit bank (if applicable), and the remarketing agent (if applicable). These annual fees are negotiated by the Beneficial Owner/Developer with each entity.

Closing costs for composite pool projects average 2.5 percent of the PEDFA loan amount. That estimate does not include fees charged by the Beneficial Owner/Developer’s counsel, participating bank or bank counsel. For stand-alone projects, closing fees depend on the various entities involved in the financing.

BIDA charges a fee of .2% or $1,500, whichever is higher.

For more information, visit NewPA.com's page on the PEDFA program.

More Funding Opportunities

The following are some of the other popular funding programs aimed at helping grow businesses in our region:

Job Creation Tax Credits (JCTC)
This state program offers employers a $1,000-per-job tax credit to approved businesses that agree to create jobs within three years. Twenty-five percent of the tax credits allocated each year must go to businesses with less than 100 employees. Tax credits may not be utilized by a business until the jobs are actually created. Must create at least 25 new jobs or expand the existing workforce by at least 20 percent.

Pennsylvania Industrial Development Authority (PIDA)
The PIDA provides low-interest loans and lines of credit for eligible businesses that commit to creating and retaining full-time jobs and for the development of industrial parks and multi-tenant facilities. The loans can be used for: land and building acquisitions, construction and renovation costs, machinery and equipment purchases, working capital and accounts receivable lines of credit, multi-tenant facility projects and industrial park projects.

Loan applications are packaged and underwritten by a network of certified economic development organizations (CEDOs) that partner with PIDA to administer the program. The PIDA program finances a portion of total eligible project costs. The maximum participation amount is determined by a variety of factors such as the proposed use of the PIDA funds, the business enterprise type applying for financing, the amount of matching financing from sources outside of PIDA, and the number of full-time jobs to be retained or created. Loan approval is contingent upon meeting the program underwriting and collateral requirements.

A variety of different industry sectors are eligible for PIDA financing including manufacturing, industrial, agricultural, research and development, hospitality, defense conversion, recycling, construction, child day-care, retail and service, export, and computer-related service enterprises.
 
Terms are: up to 15 years for land and building acquisitions and construction/renovation projects or up to 10 years for machinery and equipment purchases. Working capital and accounts receivable lines of credit have a term of 1 year and can be renewed.

Interest rates for the program are based on current market conditions.  Please contact the PIDA Office or the CEDO in the county your business is located for the current interest rate.

Workforce & Economic Development Network of PA (WEDnetPA)
WEDnetPA’s alliance of 14 state system universities, 14 community colleges and other educational providers acts as the delivery mechanism for Pennsylvania’s Guaranteed Free Training (GFT) program. Qualified companies can receive basic skills training (up to $450 per trainee and $75,000 per company) and information technology training (up to $700 per trainee and $50,000 per company) through this innovative state program. For more information, visit www.wednetpa.com/about.

For more detailed information on state business incentive and economic development programs available, visit NewPA.com's Funding & Program Finder.

About BIDA:

The Berwick Industrial Development Association is an economic development group that helps businesses, site selection consultants, and commercial realtors find available land in Columbia, Luzerne and Montour counties, Pennsylvania. They also help identify sources for financial assistance packages. Contact us today to see how we can help you.