A strong economy is leading entrepreneurs to consider starting a new business, and existing business owners to relocate and expand. That means purchasing equipment, buying property or a building, construction, and much more. Minority business owners can take advantage of a special program through the Commonwealth of Pennsylvania that’s available in the Lehigh Valley to help them finance these expenses.

The Pennsylvania Minority Business Development Authority Revolving Loan Fund provides loans to borrowers who are socially or economically disadvantaged. Their circumstances can be due to cultural, racial or chronic economic circumstance, background or other similar cases. The socially or economically disadvantaged applicant must own at least 51% of the business.

Qualified applicants are eligible to apply for up to $250,000 in financing through this program. Eligible projects include up to 90% of machinery and equipment costs, land purchases, renovation, new construction and acquisition, and working capital needs. The PMBDA program offers competitive rates and terms ranging from three to 15 years depending upon the use of the funds.

Allentown Economic Development Corporation administers the PMBDA program for the Commonwealth in Lehigh and Northampton counties. AEDC is the largest PMBDA lender in the State after the State itself, with a balance of $1.3 million in original principal loan funds outstanding. AEDC received an additional $0.2M loan to fund a recently approved line of credit. In the past two years, local PMBDA funding has leveraged over $3.3 million in other financing.

Presently there are eight loans in the Lehigh Valley’s PMBDA portfolio which fund real estate, equipment, accounts receivable, and operating cash flow. Some loans are needed for what is known as gap funding, where the loan fills the down payment requirements for larger traditional bank financing. In some cases, it serves as the primary lender covering the entire debt.

Job creation and retention is an essential component of this loan fund. Part of the loan approval criteria stipulates that the results of the loan will create one permanent full-time job or equivalent part-time job for every $50,000 borrowed. Jobs must be created within three years of closing. This stipulation is a highly successful component of the program resulting in local job creation of over 68 new full-time employees over the last five years.

AEDC seeks loan opportunities that can be supported by the business’s cash flow and what is commonly called a satisfactory debt service coverage ratio. Once loans are in place, the organization often works closely with the business to provide direct consulting support to help them succeed.

For information on loan structure, fees, terms and rates, contact David Dunn, AEDC Program Manager, Economic Development Programs at ddunn@allentownedc.com or 610-435-8890.