The Allentown Economic Development Corp. has a new tool to help businesses in its Bridgeworks manufacturing incubator.
The AEDC established a microloan program to provide small, quick funds for projects that might come up for one if its incubator clients.
The first loan recipient is Colony Meadery, which is borrowing money to buy two fermenters, which it can install now during its slow season to add capacity for when it again gets busy.
Anthony Durante, program manager for the Bridgeworks Enterprise Center, said the program lends a maximum of $10,000 at competitive interest rates and terms not exceeding 36 months or the remaining term of a client’s active lease. The meadery’s loan is for $10,000.
The new program is advantageous to incubator clients for a number of reasons, Durante said. One is access to capital.
“Many of these companies are too new to secure a traditional line of credit through a bank, and interest rates from most credit cards are very high,” he said. “This program funds small projects that can have a big impact on our client’s growth, and we can do that with a simple process, low costs and competitive rates and terms.”
He noted that in Colony Meadery’s case, timing was important, because now was the time of year the business’ owners had time to work on installing new equipment.
If they had to wait for a traditional loan from another institution, the start of work might have been delayed until their busy season because it can take a long time to get a loan approved.
“Because we already have a relationship with them, we can quickly determine, ‘Yes they can borrow this amount of money and be able to pay it back,’ ” Durante said.
Greg Heller-Labelle, president and CEO of the meadery, said the quick turnaround was important.
“We can maintain our cash reserves and buy new equipment when it makes the most sense for us to install it,” he said.
AEDC is self-funding the loans. It established the fund using a variety of sources saved over several years, including donations from graduates of the Bridgeworks Enterprise Center.
AEDC will be able to provide three to five loans at the outset of the program, Durante said.
