Alternate Financing Routes
States and banks are teaming up to offer financing programs that provide not only capital, but also benefits all around.
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When David Nadeau and his partner, Rick Edwards, went looking for financing this time last year, they had several goals: to buy out their primary investor and become co-owners of their Portsmouth, Rhode Island, manufacturing company, Renova Lighting Systems Inc.; to get short-term working capital for the company's operations; and to secure long-term financing to upgrade outdated manufacturing equipment and grow the business. In their search, they heard about Job Bank, a state partnership with Citizens Bank that offered a low interest rate to businesses that agreed to add jobs, but it didn't look like the program would be renewed for 2006. So, they decided to go with a traditional loan at a higher rate and with more restrictive terms.
"Literally a day before the closing, we got a call from the bank saying the program was back on," says Nadeau, 42. "It was a really nice, last-minute boost for us." The bank offered to swap the paperwork, so Nadeau and Edwards got the Job Bank financing, which offered an interest rate of just under 5 percent on a five-year loan for $300,000. And they were not restricted in how they used the money, a change from the traditional term loan. The hitch? The pair had to agree to add seven jobs during the next three years. "That was already built into our longer-term plan," Nadeau says. "It just might have happened later."
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