PENNSYLVANIA'S #1 WEEKLY NEWSPAPER • locally owned since 1854

Early loan repayment great chance to help businesses: Editorial

Posted 7/17/19

We know that the large chunk of money recently repaid to the borough of Middletown by the Tattered Flag Brewery & Still Works isn’t a true windfall.

After all, the $1.5 million was a …

This item is available in full to subscribers.

Please log in to continue

Log in

Early loan repayment great chance to help businesses: Editorial

Posted

We know that the large chunk of money recently repaid to the borough of Middletown by the Tattered Flag Brewery & Still Works isn’t a true windfall.

After all, the $1.5 million was a loan from 2015, not just money from nowhere. Barring some catastrophe, the borough was going to get that money back at some point. In fact, because the payoff came so early, accountants would point out there would be a loss in earned interest if the loan was paid to the end of its term of 25 years.

Still, we respectfully offer a suggestion for using the money the borough just received in a way that could benefit all of Middletown — a revolving loan fund and/or grant program, to help businesses that need a boost.

Even using a fraction of the funds could really help a business that wants to open or an established one that wants to complete an important project.

The Council of Development Finance Agencies website calls a revolving loan fund “a gap financing measure primarily used for development and expansion of small businesses. It is a self-replenishing pool of money, utilizing interest and principal payments on old loans to issue new ones.”

Lending money to a business or potential business that can show need is really not that different from what the Middletown Industrial and Commercial Development Authority, that loaned Tattered Flag the money via the borough, did with the brewery and still works four years ago. That amount loaned, however was quite a bit more than we would envision any single business receiving. But at the end of the day the gamble taken by the MICDA and the borough really paid off.

Such a program is not a new idea for the borough. In fact, it was voiced last year by Diana McGlone while she was still on the council.

Under the concept McGlone laid out, loans from $2,000 to $10,000 would be made available through the borough to residential property owners, both for owner-occupied and rental properties. However, loans also were possibly going to be made available to small business owners.

The loan fund would have used $436,000 tied to a state grant the borough provided to a developer to build Woodlayne Court apartments on Wilson Street. The developer repaid the grant to the borough in 2013.

That plan never got off the ground, however. The $436,000 has since been earmarked for Little Middletown, the project being planned to replace Kids Kastle at Hoffer Park.

But now it would seem the early retirement of the loan to Tattered Flag presents the borough with another chance to get the ball rolling in a cause to assist its business community.

Mayor James H. Curry III has been pushing for tax incentives to draw new businesses to Middletown, but that suggestion has failed to gain much traction. While a revolving loan/grant fund is different than tax incentives, the goals of both are to draw new businesses to the greater Middletown area while also lending a helping hand to businesses that already are here.

It doesn’t have to include the more than $1 million the borough recently got back. Start with $300,000 or $400,000 to get the ball rolling. Or invest the $1 million which we understand could earn well over $40,000 per year in interest and use those earnings to offer modest loans and/or grants.

At the very least we recommend the MICDA and/or the borough open a dialogue with the expanding Middletown Business Association to gauge its membership’s thoughts and suggestions. We also believe the folks at the Dauphin County Redevelopment Authority and our state elected officials would be happy to meet and offer guidance for such a program. What would it harm?

The potential benefits of such a program for the borough, its residents and business community are great.