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Don Cunningham: Lehigh Valley Lending Network Increases Access to Capital

By Colin McEvoy on December 28, 2015

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on November 16, 2015. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

Business news of late has been dominated by a discussion of interest rates and whether the Federal Reserve will raise the nation’s prime rate and increase the cost of borrowing and the amount of interest paid on savings.

The cost of finance is a critical issue in economic growth. Even more important, however, is access to that capital.

Businesses need financing to grow and create jobs if they don’t have assets of their own to fund growth. Low interest rates have been very helpful in fueling commercial and industrial growth in the Lehigh Valley.

With rates likely to change, the Lehigh Valley Economic Development Corporation (LVEDC) has worked with 13 area banks to develop a new regional coalition of banks and public lending entities called the Lehigh Valley Lending Network. The Network, which will be administered by LVEDC, will offer a single point of entry for both private and public financing. This will allow businesses that are seeking new financing to shop commercial lending institutions and economic development resource providers.

LVEDC currently administers the public financing options for both Lehigh and Northampton counties and state and federal funding. Customers now will be able to shop private funding through a coalition of 13 regional banks, including Bank of America, BB&T Bank, Conestoga Bank, Embassy Bank, Lafayette Ambassador Bank, M&T Bank, National Penn Bank, New Tripoli Bank, PNC Bank, Peoples Security Bank, Provident Bank, TD Bank, and Wells Fargo.

A ceremony to launch the Lending Network was held Dec. 15 at the Renaissance Allentown Hotel.

The idea of allowing new customers to shop for both public and private capital resources in one spot is very unique in the economic development world. It has the potential to serve as best practice across the country.

This is possible because of the support for regional economic growth by banks based in the Lehigh Valley. Banks compete aggressively for commercial lending so a willingness to join this type of coalition is rare.

“The Lending Network is not only good for customers and economic growth in the region,” said Stephen Kalamar, chairman of LVEDC’s board of directors and vice president of commercial lending at TD Bank, which is a participating bank in the Network, “but it also gives the participating banks an opportunity to compete for business that they otherwise may not be aware of.”

The Network will streamline the process for Lehigh Valley businesses seeking to establish new bank relationships and allow them to determine the lowest cost options to finance their project. Through the Network, they can canvass incentive financing and traditional bank loan products through one inquiry simultaneously.

“The fact is many companies find the process of trying to find the right bank for their needs exhausting and layered in redundancy,” said John Kingsley, LVEDC Vice President of Finance, and the architect of the Lending Network. “Add to that trying to understand the myriad of financing programs that are available to assist businesses with lower costs of capital and it can be downright daunting. We want to help companies find the right financing quickly.”

To be eligible for the Lending Network, a company must have a profitable operating history during at least two of the past three years, and must be locating or expanding their business within the Lehigh Valley. To access the banks in the Network, the company cannot have an existing lending relationship with a Lehigh Valley bank, or must be unable to obtain the lending services or products they require through their existing relationship.

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