PA Industrial Development Authority Loans
PIDA was established by the Legislature in May 1956 to stimulate economic activity in counties with high unemployment by making low-cost business loans.
With a PIDA loan, a business can borrow at below-market interest rates to expand an existing facility or acquire a new building and have the benefit of reduced interest expense. As a participating financial institution, we can assist you in determining if your loan request fulfills PIDA requirements at the time of application.
Tax-Free Financing
The Tax Reform Act of 1986 (Internal Revenue code Section 103) qualifies tax-free loan arrangements to volunteer fire companies and ambulance and rescue associations. Lending under this Reform Act is treated as an obligation of a political subdivision and enables the Bank to quote interest rates similar to those rates available for municipalities.
This type of lending enables the volunteer organization to borrow funds at favorable rates due to the interest income to the Bank being listed as tax-free. Proceeds under this type of arrangement must be specifically used by the applicant for acquisition, construction, reconstruction, or improvement of their firehouse or equipment, and facilities or equipment for ambulance and rescue associations.
Interest rates may be either fixed or variable.
USDA Business and Industry
This program guarantees loans by lenders to businesses in order to benefit rural areas by creating and maintaining employment and improving the economic and environmental climate in rural communities. The USDA defines rural areas as including all areas other than cities of more than 50,000 people and their immediately adjacent urban or urbanizing areas.
Any legal entity may borrow (except for charitable and educational institutions, religious organizations, or fraternal organizations), and there is no size restriction on the business. Loan amounts are limited to a maximum of $10 million, although in certain cases a borrower may seek a maximum of $25 million. Loan proceeds may be used for business acquisitions; for building construction, conversion, expansion or modernization; for purchase of machinery and equipment; and for start-up costs and permanent working capital.
Refinancing existing business debt can be considered under certain conditions. Some of the most notable ineligible uses of B&I loan proceeds are for lines of credit, for agricultural production (unless it is < 50% of an integrated business that processes agricultural products), for any project likely to result in the transfer of employment from one area to another, or for golf courses, gambling establishments or race tracks.
A minimum of 10% tangible balance sheet equity is required at the time of loan closing; 20% is required for all new businesses. USDA charges a 2% fee on the guaranteed principal portion and the Bank may charge its own additional fees. The interest rate is negotiated with the Bank and may be either fixed or floating. Repayment terms will generally be up to 7 years for permanent working capital, up to 15 years (or useful life) for machinery and equipment, and up to 30 years for real estate.