Lending programs spur commercial real estate development
By LVEDC Staff on April 9, 2013
Here’s some important news for the commercial real estate industry when it comes to getting money out on the street.
On April 3rd the Pennsylvania Department of Community and Economic Development (DCED) voted to keep interest rates for four key business loan programs at the lowest levels ever. This matters because the Lehigh Valley Economic Development Corp. (LVEDC) administers numerous commonwealth financing and incentive programs for qualified borrowers in Lehigh and Northampton counties.
The interest rates for the Small Business First (SBF), Machinery and Equipment Loan Fund (MELF) and Pollution Prevention Assistance Account (PPAA) loan programs will remain at 1.5 percent for applications received through June 30, 2013.
The DCED also voted to revert the Pennsylvania Industrial Development Authority (PIDA) offering back to the standard interest rate of 2.25 percent – a policy that was adopted prior to the temporary interest reduction, which expired March 31. The PIDA program is considered by the majority of lenders to be Pennsylvania’s flagship economic development lending program. The program can finance up to $2.25 million with a term of up to 15 years.
What developers, builders and office manages should know is that the program’s eligible uses include land and building acquisition along with construction and renovation costs.
Borrowers who use this program will now have two interest rate options for new loan applications:
– A fixed interested rate for the full term of the loan up to its 15-year maturation period. The applicable rate for new approvals would be calculated each quarter and set at the 10-year treasury yield plus 150 basis points, with a floor of 2.25 percent. Based on the current 10-year treasury yield, applicants would have the option of a fixed interest rate of 3.5 percent for the life of the loan.
– A fixed interest for a seven-year period set at the 10-year treasury yield. After seven years, the rate would be reset to the 10-year treasury rate. The reset rate would be limited to a 200 basis point increase/decrease from the original from the original approval rate. The reset rate would be fixed for the duration of the loan.
“The pair of interest rate options allows flexibility when working with a qualified applicant and our commercial lending partners to finance eligible real estate projects,” noted John Kingsley, LVEDC vice president of finance. “We have been very pleased with the robust recent activity in the PIDA program here at LVEDC.”
For more information – or to apply for a loan – please contact Kingsley at (610) 266-0887.
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