FIRST LINE OF CREDIT GUARANTEE FINALIZED UNDER STATE’S NEW MAIN STREET BUSINESS ASSISTANCE PROGRAM
EDA resources combined to assist Pennsauken company.
TRENTON, NJ (May 13, 2009) – McKella 280 Inc., a Pennsauken-based provider of graphic design, digital imaging, printing and fulfillment services, is the first company to finalize a line of credit guarantee under a new program established by Governor Jon S. Corzine and the state Legislature to help New Jersey businesses cope with the effects of a national economic downturn.
McKella recently closed a $1.2-million line of credit with Susquehanna Bank that includes a $250,000 guarantee from the New Jersey Economic Development Authority (EDA) made under the Main Street Business Assistance Program. The Main Street initiative enables qualified small and mid-size businesses and nonprofit organizations in New Jersey to access capital by providing state support for bank lending through loan participations and credit enhancements. The EDA-managed program is one of several critical initiatives established under Governor Corzine’s Economic Assistance and Recovery Plan to aid businesses during a national recession.
The company also closed a $2-million loan with Susquehanna Bank that includes a $500,000 EDA participation and a $375,000 guarantee of the bank’s portion of the loan under the Statewide Loan Pool for Business program, which will be used to refinance higher-cost debt.
“These financings are an excellent example of how EDA resources can be combined to support Governor Corzine’s Economic Growth Strategy to encourage the growth of small businesses in New Jersey in this difficult economic climate,” said EDA Chief Executive Officer Caren S. Franzini. “We are delighted that, for the first time, we have been able to offer a line of credit guarantee under the Main Street initiative.”
McKella is owned by Richard McGee Jr. and Joseph LaGrossa and was formed in October 2008 with the merger of Digital Color Image, Inc. and Citation Graphics. Digital Color was founded in 1985 by McGee; Citation was established in 1977 by LaGrossa.
“With the support of Governor Corzine, the EDA and Susquehanna Bank, McKella 280 can focus on maintaining our employee base, growing our business and creating additional jobs in New Jersey,” LaGrossa said. “This financing will enable us to continue to provide our services to other businesses in the state.”
“At Susquehanna Bank, we are committed to investing in local communities by developing strong customer relationships and providing financing to businesses,” said David Slobotkin, assistant vice president and commercial relationship manager. “We had been working with Digital Color for several years, and it is truly rewarding to watch our clients continue to grow and develop. We were pleased to work with the EDA to provide financing for McKella 280, and we look forward to working with them in the future.”
Developed in partnership with the New Jersey departments of Banking and Insurance and Treasury and the state’s banking community, the Main Street program has been funded by a $50-million state appropriation. The program has two components – a loan participation and/or guarantee product that is being offered through participating banks and a line of credit guarantee offered for the first time through the EDA’s 14 Preferred Lender partners. To qualify, borrowers must be in business at least two years, maintain jobs in New Jersey and meet other EDA eligibility requirements.
For term loans secured by fixed assets like buildings and equipment, the EDA will provide a maximum participation of 25 percent, or $1 million, in a bank loan and a maximum bank loan guarantee of 50 percent, up to $2 million. For working capital loans to cover operating expenses, the EDA will provide up to 25 percent of a bank loan, not to exceed $750,000, and a maximum guarantee of 50 percent, up to $1.5 million. The aggregate EDA exposure cannot exceed 50 percent of the total bank loan amount to a total maximum of $2 million. The interest rate on EDA loan participations is fixed at 5 percent for a maximum of five years. Borrowers also can use the Main Street program to refinance higher-interest debt.
The line of credit guarantee, which can be used for fixed assets or working capital, is set at a maximum of 50 percent of the bank amount, up to a maximum of $250,000.
Under the Statewide Loan Pool Program, the EDA can participate in or guarantee up to 50 percent of a bank loan, up to a maximum total exposure of $2.75 million for fixed assets like buildings and equipment or $2.25 million for working capital. The EDA has provided more than $700 million in loan participations and guarantees to over 700 business projects that have created in excess of 9,500 new jobs since the program was developed in the early 1990s.
Applications and program details for the Main Street and Statewide Loan Pool Programs are available online at www.njeda.gov. For more information on the Main Street Business Assistance Program, you also may call 1-(800) 537-7397 or e-mail MainSt@njeda.com.