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Franklin leads Pa. in loans to small business

November 01, 2008|By DON AINES

CHAMBERSBURG, PA. - From 2003 to 2007, the Franklin County Area Development Corp. led Pennsylvania in the number of loans made through the state's Small Business First Fund (SBFF), arranging 86 loans totaling $12.5 million, according to FCADC President L. Michael Ross.

"It's really been an effective means for the state to get its programs delivered in a way that all businesses have equal access," Ross said this week. SBFF loans have helped businesses start and expand, providing partial funding on projects totaling $77 million that created 450 jobs and helped retain 1,800 more, he said.

Businesses such as Gish Logging in Fort Loudon, Pa., have used the low-interest financing to expand production and employment, co-owner Mike Jones said.

"If you go all the way back to 1984, it was just Ernie (Gish) and me," Jones said recently. The company introduced Hot Sticks, its prepackaged firewood, in 1999 and has gone from about a dozen employees to 35, he said.

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Those workers are processing 200 cords of oak and other hardwoods a day, Jones said. The kiln-dried and pest-free product is approved by the U.S. Department of Agriculture for shipping across the nation, he said.

The company also produces kindling and mulch, Jones said.

Companies such as Gish Logging can access loans for up to 50 percent of a project's cost or $200,000 at 3 percent interest, Ross said. Loans for working capital are repayable in three years; for machinery in five to seven years; and real estate in 15 years, he said.

Ross said the program has worked so well the FCADC started a revolving loan fund of its own, the Franklin County First Fund. That allows businesses to borrow half a project's cost or up to $50,000, whichever is less, at an interest rate of 75 percent of prime, he said.

The state Department of Community and Economic Development's Center for Business Financing determined Franklin County was the leader in SBFF loans. Bucks County was second with 44 loans, Ross said.

"The SBFF is a state-funded program, but it's delivered through area loan organizations, of which FCADC is one," Ross said. "We become the deal-maker and the group that is going to structure the loan through the nonprofit economic development corporation."

ther manufacturers that have benefited from SBFF loans include Olson & Olson Inc. and Edge Rubber in Chambersburg and Rebuilders Unlimited in Waynesboro, Pa., Ross said. In 23 years, FCADC has helped arrange $231 million in low-interest business financing on 600 projects totaling $1.2 million, according to Ross. Those projects created 13,700 jobs and helped retain 24,000 more, he said.

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