HERMITAGE — Valley businesses that need some extra funds for an expansion or a relocation could have a new loan opportunity later this year.
Hermitage Board of Commissioners President William Moder said the Shenango Valley Enterprise Zone has decided to expand its boundaries for loan opportunities.
So far the enterprise zone has issued two loans, one for $250,000 and a second for $187,000. However, the enterprise zone loan program still has about $2 million available for loans, said Moder, who represents Hermitage on the enterprise zone and is chairman of its loan committee.
The Shenango Valley Enterprise Zone includes representatives from Sharon, Farrell, Hermitage, Sharpsville, Wheatland and Greenville. An enterprise zone is a designated area where a government entity uses incentives — including tax breaks or, as with the Shenango Valley Enterprise Zone, low-interest loans — to encourage investment in neighborhoods or municipalities that might not traditionally attract businesses.
Some of the municipalities, such as Sharpsville and Farrell, are completely within the zone, but Moder said others, like Hermitage, have portions that are within city limits but outside the zone's boundary. Under the proposal, the enterprise zone would include all of every municipality member.
In Hermitage, one boundary runs up East State Street to Keel Ridge Road, leaving swaths of territory past Keel Ridge Road outside of the zone. Shenango Valley Enterprise Coordinator Jim Cardamon said other municipalities in the municipalities have similar issues.
In previous years, businesses have reached out to the enterprise zone to ask about loan opportunities, only to find out they were in a participating municipality but not in the correct zone. In one particular instance, a business wanted to relocate across a street but couldn't apply for a loan because the street itself was the boundary, Cardamon said.
"I have had phone calls where someone was thinking of locating here or there," Cardamon said. "And I look at the map and have to tell them, 'that's on the wrong side of the street."
The majority of the enterprise zone's loans are typically granted to manufacturers, with the enterprise zone's lower interest rates compared to other lenders something that is often attractive to manufacturers due to the costs in acquiring property and buildings, and the necessary equipment investment, enterprise zone President Brent Ward said.
That was how Ward discovered the program — when he applied for a loan to his own company, Integrated Fabrication and Machine Inc., back in 2000.
"It's typically a significant investment for a company or someone," he said.
Private loan interest rates have been lower over the last few years. Ward said that means fewer people have applied for loans through the enterprise zone.
Increasing the boundaries of the enterprise zone will not only improve accessibility in terms of geography, but it will hopefully spread awareness of the enterprise zone's loan program to more prospective businesses, Ward said.
"Not only is it easy to deal with prospective clients, but it'll be easier to expand because if someone's in one of those six member communities, we won't even have to look at a map," he said.
Typically the enterprise zone issues about two or three loans a year, sometimes partnering with agencies like Penn-Northwest Development Corp. and banks or municipalities such as Hermitage or Farrell that have their own revolving loan fund programs. This allows businesses to potentially receive financial support from three agencies while filling out only one application, Moder said.
"We try to make it user-friendly for the borrower," Moder said.
Past loans to local businesses have been largely successful over the years. In response to the COVID-19 pandemic, the enterprise zone sent out more than 20 letters to clients offering a three-month hiatus from loan payments — with only about four taking advantage of the offer. Cardamon said that suggested the other businesses must be doing well enough financially to weather the pandemic.
But he said the repayment break could have been a lifesaver to the four companies that needed it.
"Businesses were suffering through no fault of their own, and we felt it was the right thing to do," he said.
The zone administrators are preparing a resolution for mailing to each municipality's representatives within the next week. Cardamon said he could answer any questions about the proposal before a vote.
At least five of the zone's six communities must approve the resolution for it to go into effect. Moder said the Hermitage Board of Commissioners are expected to vote on the resolution in November.
The resolution requires five of the six communities to approve it, with the Hermitage Board of Commissioners expected to vote on the resolution at their meeting in November, Moder said.
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