More Oversight and Transparency for Proposed Pennsylvania Economic Development Loans | State
(The Center Square) – A Pennsylvania program that offers low-interest loans to spur job creation could face increased scrutiny, requiring annual financial training and reporting requirements public.
For state-supported economic growth, business loans are issued through the Pennsylvania Industrial Development Authority. Established in 1956, PIDA provides loans and lines of credit for industrial parks and a range of manufacturing, industrial, healthcare and other business sectors. The interest saved on these loans is intended to help businesses reinvest in the business to keep their workforce competitive.
PIDA can provide home 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 the authority’s information sheet. To obtain funding approval, PIDA generally requires a 50% match from other sources and guarantees.
The authority oversees loan programs administered by economic development organizationswho are certified by PIDA and adhere to the standards created by PIDA to maintain certification.
A bill, HB2265, would improve monitoring of these loans; it passed unanimously in the House of Representatives on May 25 and awaits a decision in the Senate.
“It’s kind of a common sense bill,” said Rep. Lee James, R-Seneca, the bill’s sponsor.
The bill would require staff of economic development groups to complete at least six hours of financial training per year and would require PIDA to conduct annual assessments of the groups’ performance and the economic performance of their loan portfolios.
“Even professionals don’t always succeed, so this type of training is absolutely essential,” James said. “Otherwise, we’re running out of money.”
In addition, PIDA should create an annual report highlighting performance evaluations of economic development groups and establish a decertification process for development groups that fail to meet standards.
Staff training and economic performance of enterprises are important for the long-term stability of the program.
“(Professional staff) are responsible for making loans in their respective communities and we want to make sure that the loans are repaid so that they can be reused later for future opportunities,” James said.