It’s designed to facilitate business development, growth
L. Michael Treadwell
“The IRP program offers low-interest, fixed-rate loans, ranging from 4% to 6%, with terms of three to 10 years, depending on the use of the proceeds. The program also has a low equity requirement of 10%, which is very attractive to small businesses.”
In 2011 the County of Oswego Industrial Development Agency (IDA) added the USDA Intermediary Relending Program (IRP) to its toolbox of financing programs for small businesses. Earlier this year, the IDA was successful in obtaining additional funds to recapitalize this program with the USDA to extend its lending capabilities.
IRP loans are designed to be used in conjunction with other funding from non-IDA sources, such as banks and other economic development lenders, to serve as either “gap” or “subsidy” financing. “Gap” loans are those which provide funds needed to complete a total project which would not be available from other sources.
Loans are offered on a first-come first -served basis. To qualify for an IDA IRP loan, applicants must prove credit worthiness, project feasibility, job opportunities and environmental compliance. If the applicant needs help in developing a business plan to support the project, they will be referred to and assisted by the Small Business Development Center at SUNY Oswego’s Business Resource Center.
The program offers low-interest, fixed-rate loans, ranging from 4% to 6%, with terms of three to 10 years, depending on the use of the proceeds.
Funding participation is capped at 50% of the total project cost or $100,000, whichever is less. However, in general, the participation level is 25% or less. The program also has a low equity requirement of 10%, which is very attractive to small businesses. Under special circumstances, the IDA may consider, in accordance with USDA guidelines, a loan of up to $150,000. All IDA IRP loans will be secured with real property and assets of the business or business owners or corporate officers. Loans may also be secured by the equipment purchased with the loan proceeds. The IDA can subordinate its loan to a bank.
IRP loan proceeds may be used to purchase machinery, equipment and inventory, or to cover soft costs, startup costs and working capital. The use of loan proceeds to refinance existing debt is prohibited.
Projects eligible for financing under the IDA IRP loan program are limited to the following types: (1) manufacturing facilities; (2) warehousing and distribution facilities; (3) research and development facilities; (4) service and support industries; (5) tourism- related service businesses that are essential to the county’s overall tourism development programs; and (6) other economic development related projects deemed essential and necessary for the county’s economic well-being.
To further economic development in the county, borrowers are strongly encouraged to provide opportunities for employment to lower-income residents of Oswego County and award contracts for work to be performed with loan proceeds to businesses or persons which are located in the county.
To date, the program has been successful in financing 15 businesses across Oswego County supporting the manufacturing, service, construction, hospitality and tourism industries. Local banks have been particularly happy to partner with the program as it leverages funds and reduces all partners’ exposure. The funding can be used more flexibly by the borrower and the program has lower equity requirements than traditional bank financing which can allow banks to finance projects they wouldn’t otherwise participate in.
If you have a project that could benefit from a County of Oswego IDA IRP loan, contact Kevin LaMontagne, Operation Oswego County’s business finance director, at 315-343-1545 or email firstname.lastname@example.org for more information on eligibility and to begin the application process.
To date, the program has been successful in financing 15 businesses across Oswego County supporting the manufacturing, service, construction, hospitality and tourism industries.
L. Michael Treadwell, CEcD, is executive director of Operation Oswego County based in Oswego. To contact him call 315-343-1545 or visit www.oswegocounty.org.