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(The Center Square) – A Pennsylvania program that provides low-interest loans to spur job creation could get more oversight, requiring annual financial training and public reporting requirements.
For state-favored economic growth, business loans are made through the Pennsylvania Industrial Development Authority. Established in 1956, PIDA grants loans and lines of credit targeted to industrial parks and a range of manufacturing, industrial, health care, and other business sectors. The interest saved on those loans is meant to help businesses reinvest in the company to keep their workforce competitive.
PIDA can grant real estate loans up to $2.25 million, machinery and equipment loans up to $1.5 million, and working capital term loans and lines of credit up to $100,000, according to the authority’s fact sheet. To get approved for financing, PIDA generally requires a 50% match from other sources and collateral.
The authority oversees loan programs administered by economic development organizations, which are certified by PIDA and adhere to standards created by PIDA to maintain certification.
A proposed bill, HB2265, would enhance oversight for those loans; it passed unanimously in the House of Representatives on May 25 and awaits action in the Senate.
“It’s a commonsense sort of bill,” said Rep. Lee James, R-Seneca, the bill’s sponsor.
The bill would require the staff of economic development groups to have a minimum of six hours of financial training annually and require PIDA to conduct annual performance reviews of the groups and the economic performance of their loan portfolios.
“Even the professionals don’t always get it right, so that kind of training is absolutely critical,” James said. “Otherwise we run out of money.”
Additionally, PIDA would have to create an annual report highlighting the performance reviews of the economic development groups and establish a decertification process for development groups that fail to meet standards.
The training of staff and economic performance of the businesses matter for the long-term stability of the program.
“(Professional staff) are charged with the responsibility of making loans in their respective communities and we want to be sure that the loans are repaid so that they can be reused down the road for future opportunities,” James said.
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