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Pennsylvania to unveil cheap loan fund as catalyst for jobs- Citizens Bank, state join forces

Gov. Ed. Rendell and Citizens Bank officials today will announce a $100 million loan fund to be created by the bank that will offer 2.5 percent interest loans for businesses that agree to create new jobs.

By:
Tom Barnes
Pittsburgh Post-Gazette

http://www.nasvf.org/web/allpress.nsf/pages/8632

At a news conference, Rendell and Stephen D. Steinour, chief executive officer of Citizens Bank of Pennsylvania, will unveil something called the "Citizens Job Bank,” a $100 million loan fund. Rendell called the interest rate "extremely low,” but to make the program even more attractive, the bank also will waive all fees that are normally associated with loan applications.

Rendell said the private pool of loan money is the first of its kind in the state and is "designed to spur business expansion and attract new companies to the state.” In an interview Friday, he thanked the bank "for stepping up as a corporate leader.”

Rendell said the state Department of Community and Economic Development will coordinate the Citizens loans with other loans from the Governor’s Action Team to businesses, especially in the manufacturing sector. For example, under current state programs, there is a $5 million limit on certain loans for new equipment, machinery and technology.

"Let’s say a firm wanted to buy $7 million of new equipment,” Rendell said Friday. "They could apply for a $5 million loan from the state at 2 percent and the other $2 million from the Citizens loan fund.”

The Citizens loan would still have to be approved by the bank’s loan committee, he said, but the state would recommend approval, increasing its chances of success.

"It’s a way for us to stretch state government loan funds,” Rendell said. While manufacturing firms will get priority on the new loans, companies involved in activities such as distribution and services will also be eligible.

Rendell is hoping that the Citizens loans to businesses will create at least 4,000 new jobs in Pennsylvania within several years. A company that borrows money from the Citizens Job Bank must agree to create at least one full-time job for every $25,000 borrowed.

Steinour said he agreed with Rendell that "job creation is far and away the No. 1 issue in Pennsylvania. We’re proud to partner with the state to address it in a significant way.”

Rendell sees the bank’s loan program as a private vehicle to work alongside his $2 billion economic stimulus loan program, which he outlined a year ago but which still hasn’t been approved by the Republican-dominated General Assembly.

Rendell maintains that if the state provides $2 billion in loans, it will leverage private investment of at least $5 billion, further creating jobs. He is hoping that other banks, insurance companies and financial institutions will copy what Citizens Bank is doing with the new $100 million pool of loans.

The new loan fund is the latest vehicle in Citizens Bank’s effort to raise its public profile since entering Pennsylvania about five years ago. In Philadelphia, it is putting its name on the Phillies’ new ballpark, which opens next month.

In Pittsburgh, it took over the commercial branches of Mellon Bank.

The Citizens Bank announcement comes at a crucial time for Rendell, who has been struggling with the Legislature to get two economic development programs enacted: his stalled economic stimulus program, as well as a new $800 million program called Growing Greener 2.

GOP legislative leaders fear that borrowing $2 billion through bond sales, as Rendell has proposed to raise funds for the stimulus program, is too much "government by credit card” and will cost the state too much in interest fees over the next 20 years.

GOP officials and some manufacturers also have criticized new toxic emission fees and higher landfill fees that Rendell has proposed to pay off the $800 million in bonds to be sold to pay for Growing Greener environmental programs.

Rendell said he’s urging the Legislature to vote on the economic stimulus package by March 31. He’s hoping for a vote on Growing Greener, which offers money to clean up old industrial sites and improve state parks and forests, by June 30.

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