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FOR IMMEDIATE RELEASE |
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State
Rep. Mark Longietti
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Bill with origins in Mercer County hearing passes House
HARRISBURG, June 23 – A bill co-sponsored by state Rep. Mark Longietti, D-Mercer, intended to help manufacturing and high-tech businesses grow in Pennsylvania, even during a struggling economy, was unanimously passed by the House of Representatives today.
House Bill 1597 now goes to the Senate for consideration.
The legislation would revise the Second Stage Loan program operated by the Pennsylvania Department of Community and Economic Development to make it more attractive to lenders.
The bill grew out of a House Commerce Committee roundtable discussion in Hermitage earlier this year – the first in a series across the state on stimulating the economy in a recession, according to Longietti.
"Larry Reichard, executive director of Penn Northwest Development Corporation, the lead economic development agency in Mercer County, testified that businesses need access to capital during a recession but lenders can be hesitant to provide that capital," Longietti said. "He suggested that the state consider providing loan guarantees to open the flow of capital to restart the economy."
Second Stage encourages financial institutions to provide loans to life science, manufacturing and advanced technology businesses by having the state share some of the risk. But the original parameters of the program are not enticing enough, Longietti said. In five years, the program has issued just six loan guarantees totaling $2.7 million.
Existing criteria restrict the loan guarantee to half the loan for the first two years, then lowers it to 25 percent for the remainder of the term. Loans can only be made to businesses that are at least two years old, but no more than seven years old, and the loan amounts are capped at $1 million.
The bill, which Longietti co-sponsored, would keep the two-year age minimum but eliminate the age cap of seven years, retain the 50 percent loan guarantee for the life of the term, and increase the per-loan cap to $5 million.
"Eliminating the seven-year cap allows us to help our more mature businesses that are the bedrock of our community, and are feeling the pinch of the deep economic recession," Longietti said. "We can do all this without tapping tax money. The bill would shift $50 million from the under-used Tax Increment Financing Guarantee Program to where we need it.
"This bill shows that Harrisburg really does listen to Mercer County and our needs," Longietti said.
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