By the end of this month, Allentown Economic Development Corporation will be the official administering agency for the Pennsylvania Minority Business Development Authority Revolving Loan Fund. It already administered the loans for Lehigh County and is now assuming regional duties from Lehigh Valley Economic Development Corporation.
AEDC’s and LVEDC Boards of Directors voted to approve the transaction, as did the State of Pennsylvania’s Department of Community and Economic Development. Additionally, AEDC recently applied to the state for additional loan funds and was approved.
“Consolidating the program that serves Lehigh and Northampton counties into one resource eliminates confusion for those seeking loans in regards to where to go and whom to speak with,” explained David Dunn, AEDC’s Program Manager, Economic Development Programs. “It also streamlines the process because AEDC has specific resources present to manage the program as a core part of our mission.”
The loan program’s objective is to stimulate growth and expansion of minority-owned businesses and to create jobs in Northampton and Lehigh Counties. Loans of up to 90 percent of the eligible project cost (or $250,000, whichever is less) can be used for machinery and equipment costs, real estate acquisition, new construction, rehabilitation, and engineering, architectural, legal and other related costs.
AEDC currently has $300,000 in its loan pool that has been fully utilized. It will receive another $300,000 from the Pennsylvania DCED this month, which is already over 50 percent committed, along with the $200,000 from the reassignment of the LVEDC program, which has only about 25 percent of its funds lent.
“We are expecting several loan applications in the next month,” said Dunn. “That will bring combined loan commitments for the entire program to more than 75 percent of the available funds. Should we need more, we will evaluate requesting additional funds from DCED.”
Last year, the PMBDA program guidelines expanded the spectrum of who can apply for the loan.
“The PMBDA program has expanded from a focus on ethnic minorities to include socially or economically disadvantaged persons,” explained Dunn. “Someone applying for a loan needs to demonstrate, regardless of sex or marital status, that they experienced cultural, racial, or chronic economic circumstances or background, to qualify under this program. This means that many more businesses are now eligible for this loan program.”
AEDC has started notifying existing borrowers of the change in loan program assignment through meetings and direct contact. Marketing the program to the business community is being made through connections with regional minority-focused business groups, including the Black Business News Network and The Hispanic Business Network. Staff members are also reaching out by presenting at Rotary and attending minority-focused community business development events such as the recent Promise Neighborhood of the Lehigh Valley Entrepreneurship Without Limits event in downtown Allentown.
Minority business owners considering applying for a PMBDA loan to grow their business will need to prepare a formal application with financial statements, tax returns, and sufficient collateral to support the loan. The borrower also needs to demonstrate that they have sufficient present and projected future cash flow to support the loan payments. Read this article about how to prepare for a loan application.