Pennsylvania is trying to sweeten its borrowing programs for manufacturing companies. It plans to drop interest rates and waive borrowing fees for businesses applying for loans in the next three months.
The idea came from the governor’s advisory panel on manufacturing policy.
It’s a temporary offer, good through the end of March, for businesses applying to certain loan programs for such expenses as machine purchases and an initiative that links in-state manufacturers to international buyers.
Janis Herschkowitz, president of manufacturer PRL Inc. in Lebanon County, says lower borrowing rates and fewer fees make capital more accessible at a time when bank loans are hard to come by.
“What it is enabling us to do is go out and buy a piece of equipment that we wouldn’t otherwise normally buy,” she said. “Say we buy a CMC machine, then we hire two more machinists to put on that piece of equipment, getting more revenue for the product we sell into the state, and they’re also starting to pay taxes on a personal level.”
The state Department of Community and Economic Development has no firm estimate of how much the temporarily lowered interest rates and waived fees could cost the state.
Development Secretary Alan Walker says the initial cost to the state could be several million dollars, depending on how many applications it receives.
“But what’s going to happen is it’s going to bring in so much more manufacturing that that will far offset the cost. So we look more at more the increased revenues it’ll bring, which is six or seven to one, the ratio,” he said Tuesday. “So it’s a very favorable return on our investment.”
The initiative is a three-month pilot program recommended by a panel advising the governor on manufacturing policy.
The council found one of the chief concerns among businesses is having little access to capital.