PAWTUCKET â€” For the past 20 years, small- or medium-sized business owners, either in Pawtucket or looking to relocate here, have had a helping hand to turn to for some of their financing needs. It has come by way of a non-profit, quasi-city entity called the Pawtucket Business Development Corporation, and it's still very much a viable resource for providing low-interest lending even in this current difficult economy.
On Wednesday, city officials and board members of the Pawtucket Business Development Corporation gathered at the Hose Co. No. 6 restaurant for the 19th annual meeting. Mayor Donald R. Grebien and PBDC President Michael Chute spoke of reasons why the PBDC was created back in 1993 and the many ways it has spurred the success of local businesses and fostered economic development in the city. J.R. Pagliarini, chief of staff at the Rhode Island Economic Development Corporation, was also an invited guest.
Chute noted that in 1993, former Mayor Robert Metivier resurrected the Pawtucket Business Development Corporation, formerly the Pawtucket Local Commercial and Industrial Development Corporation, for a specific reason. The state Registry of Motor Vehicles had to vacate its facility in Providence and a local businessman saw this as an opportunity to buy a vacant building in Pawtuciet and then elase it to the state for a new Registry.
The problem, said Chute, was that the businessman could not get bank financing without a signed lease and could not get a lease until he owned the building. Solving this â€ścatch-22â€ť situation was the newly reformed PBDC, which, through funding through Community Development Block Grants, provided a bridge loan to the businessman. This enabled him to purchase the building and bring the Registry to Pawtucket, where it remained for many years, said Chute.
Since then, the PBDC has approved $3.5 million in low interest loans, said Chute. This, in turn, generated over $16.6 million in other bank funding, bringing jobs and tax revenue to Pawtucket.
In his remarks, Grebien also hailed the importance of the PBDC, noting that since its revival, the non-profit corporation has provided more than 60 loans totaling over $3 million and leveraging some $28 million in bank financing for local businesses.
The mayor said that while the struggling economy and other factors saw no new PBDC loans during 2012, he said are are â€śmany signs pointing to an improved economy for the city.â€ť He listed the redevelopment of the former American Insulated Wire building, a medical call center bringing jobs to a mill on Freight Street, a new TB Bank building being built off Cottage Street, and the construction of the new Blackstone Valley Community Health Care facility downtown as some examples of investments being made in the community.
Additionally, Grebien said the upcoming completion of the I-95 Pawtucket River Bridge and re-opening of the Conant Street Bridge will improve access to the city from major metro areas and increase its attractiveness to business developers.
Going forward, Grebien said he expects the PBDC to play an active role in business development, and noted that the corporation has $300,000 â€śin the bankâ€ť available for loans that create jobs. He also noted that PBDC plans to implement a â€śmicro-loanâ€ť program that will provide more flexibility in fulfilling borrowing needs
According to PBDC guidelines, loans are available up to a maximum of $100,000 per borrower. The primary focus of the revolving loan program is to provide financing to small- and medium-sized companies.
To qualify, the business must be located in Pawtucket or relocating to the city. It must create or retain jobs, and must demonstrate the need for the funds as well as the financial strength to repay the loan. Ineligible businesses and uses of PBDC loan funds include certain types of service companies (e.g. publishers) and passive investment.
The loan review committee will consider the total project costs that will be incurred by a potential borrower by weighing the leveraging of other funds, the availability of additional capital, the equity invested, the number and quality of the jobs created or retained, the impact on local taxes and the total amount of PBDC funds required.
PBDC will require an overall project leveraging ratio of $1 of private funds (debt or equity) injected into the project for every $1 of PBDC funds. The leveraging ratio for ventures funded exclusively under the commercial/retail program may be lowered to 50 cents of private funds to $1 of PBDC funds. The leveraging of projects involving the acquisition and improvement of real estate will only require $3 of private funds to $1 PBDC funds.
Equity from business owners or stockholders of not less than 10 percent will be required in all of the loan categories with the exception of commercial /retail ventures, which require 20 percent. Transaction costs of undertaking the loans made by PBDC will be passed through to the borrower. Also, borrowers will be made aware that since federal funds may be involved in the financing, certain monitoring of financial statements and employment records will occur.
For complete information, visit the website: www.pawtucketri.com/pbdc or call Herb Weiss, Pawtucket's Economic and Cultural Development Officer, at 724-5200 or e-mail: email@example.com.
During Wednesday's meeting, longtime PBDC attorney John F. Neary, of Neary and Milos, LLP, was honored for his service. He was presented with a handcrafted business card case created by Pawtucket-based Ahlers Designs.
The following officers and directors were again voted in: Michael Chute, president; Barney Heath, secretary/treasurer/director; Richard Goldstein, director, David Strauss, director; Richard Sugarman, director; Linda Dewing, director; and Roger Lemoie, director. Two members whose terms were up, Isaac Amponsah and Allen Chatterton, were reappointed.