Fontana Says Legislation to Help Businesses is Moving Forward

This week has proven to be a great step forward for businesses as well as economic development across Pennsylvania. I am pleased to announce that legislation has been advanced that would give the Commonwealth even better opportunities to financially assist businesses across the state.

When Governor Corbett took office in 2011 he proposed a Liberty Financing Authority (LFA) which would promote business growth by taking advantage of low-interest bond rates while granting more flexibility to move funds around to meet the needs of various economic development business programs. However, this initiative never made it through the 2011 budget negotiations due to concerns raised by both Democrat and Republican legislators.

Over the past year, I have worked diligently with my colleagues to iron out our differences in order to get this authority under way. As minority chair of the Senate’s Community, Economic and Recreational Development Committee, I am proud to have helped foster the way for passage in committee of Senate Bill 1257 (SB 1257) which is the vehicle for the Liberty Financing Authority. Under this legislation, the LFA will have the ability to combine nine existing Department of Economic Development (DCED) business financing programs to be placed under one “umbrella,” that will administer about $1.1 billion in loan guarantees.

The LFA will be governed by a 15-member board, including members from the private sector, that will sell both tax-exempt and taxable bonds to investors to generate revenue. This money would then be distributed to business projects to meet demand through financing. Furthermore, the expenses of the authority will be paid from the assets or income of the authority and not from the Commonwealth.

Senate Bill 682 (SB 682), also passed in committee, is a bill I authored with the intent of further enhancing the LFA by utilizing an additional business financing program DCED currently administers. Due to underutilization of the current Second Stage Loan Program, I have revitalized and expanded the program so that it will meet the needs of and attract more interest from the small business industry.

The Second Stage Loan Program was established to drive economic development specifically for commercial lending institutions that make loans to life sciences, advanced technology or manufacturing businesses. Because of the lack of business history, banks are often reluctant to extend lines of credit to early-stage businesses. The Second Stage Loan Program provides guarantees in an aggregated amount not to exceed $50 million.

Under SB 682, the Second Stage Loan Program would become the Small Business Investment Guarantee Program that would allow a commercial lending institution or economic development organization the ability to make loan guarantees available to any eligible small business (under 100 employees) located in Pennsylvania. A loan guarantee may be up to $1 million for any one loan.

In the future, I hope to offer SB 682 as an amendment to the Liberty Financing Authority legislation. This legislation offers an essential program to help spur additional economic growth. The LFA legislation has come a long way since first written. I am proud to have become a co-sponsor to this measure and look forward to voting in its favor as it proceeds through the legislative process. The sooner Pennsylvania starts to invest in the various economic development initiatives the sooner our local communities as well as the state will see a return of revenue back to areas that need it the most.