Forward Lawrence will soon be offering Lawrence County small business loans.
Linda Nitch, director of economic development for Forward Lawrence, said at Tuesday’s city council caucus meeting that the two loan programs were made possible through a five-year contract with the Pennsylvania State Small Business Credit Initiative, which will provide the county with more than $1.2 million in debt financing.
“The town of New Castle has a large percentage of these businesses,” Nitch said. “I hope a lot of people see this as a benefit for them.”
The Very Small Business Loan Program can fund loans ranging from $5,000 to $100,000, or 50% of eligible project costs, to micro-businesses with 10 or fewer full-time employees.
Nominations will be available on lawrencecounty.com by Monday or by contacting LCEDC Deputy Director Diane Richardson at (724) 658-1488 or [email protected].
Nitch said state government loans will be issued in “tranches,” with the first being $300,000.
To be eligible for VSB, at least one majority owner must have a minimum FICO credit score of 620, 10 full-time employees or less, be legally registered to do business in Pennsylvania. Loans cannot be made to any business owned or operated by current Lawrence County Economic Development Corporation board members.
Businesses are limited to one loan per business entity over a two-year period.
Approved uses of the loans include the acquisition or renovation of buildings, leasehold improvements, and the purchase of new or used equipment. Future operating expenses such as payroll, rent, mortgage, utilities, taxes, and inventory are eligible project costs, but cannot be funded by the program.
Loans cannot be used to refinance existing debt and cannot be used for personal obligations, licensed rolling stock, intangibles, providing funds to owners, partners or shareholders, except as ordinary compensation for services and transactions with related parties.
The application fee is $100 and the interest rate is 2.5% for the term of the loan. In addition, a minimum of one full-time equivalent job must be created or maintained for each $75,000 borrowed or maintained.
The Small Business Equality Loan Program can fund loans ranging from $10,000 to $250,000, or 50% of eligible project costs, to businesses with up to 500 employees and those legally registered in Pennsylvania that meet the criteria for social and economic disadvantage.
Like the VSB program, the Small Business Equity program requires at least one majority owner to have a FICO credit score of 620 and at least one full-time equivalent job to be created or maintained for every $75,000 borrowed. The loan has an application fee of $100 and an interest rate of 2.5%.
The eligible uses of the project are the same as for the VSB program. Due to poverty levels, businesses in New Castle and Ellwood City as well as those in rural areas are eligible. Other SEDI qualifiers include being a woman- or veteran-owned business, an owner with limited English proficiency, a person with a disability, an environment isolated from mainstream American society, a a Native American tribe, a community in economic transition or an ethnic or racial minority.
Nitch advised all business owners to have all of the documents needed to apply for a loan from a bank, including financial statements and tax returns.
Nitch also said the LCEDC would like to see business plans for the projects the loans would be used for, saying places like Duquesne University’s Small Business Development Center can help companies prepare them.