Subchapter B. STATEMENT OF POLICY
Sec.
71.101. Purpose of program.
71.102. Definitions.
71.103. Application evaluation.
71.104. Application process.
71.105. Effect.
Source The provisions of this Subchapter B adopted April 27, 1990, effective April 28, 1990, 20 Pa.B. 2304; renumbered from 13 Pa. Code Chapter 6, May 16, 1997, effective May 17, 1997, 27 Pa.B. 2415. Immediately preceding text appears at serial pages (145855) to (145857).
§ 71.101. Purpose of program.
(a) The Machinery and Equipment Loan Fund (MELF) is designed to stimulate the growth of, and to assist in the retention of, mature Pennsylvania businesses by providing low-interest financing for machinery and equipment to businesses unable to fully finance their projects with equity, bank financing or other private and public sources.
(b) The goal of MELF is to increase the competitiveness, productivity and value of Pennsylvania’s businesses, in conjunction with other State and local financing programs and other economic development programs.
§ 71.102. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act—Machinery and Equipment Loan Fund Act (73 P. S. § § 399.31—399.40).
Eligible business—A for-profit corporation, partnership or proprietorship which is involved in industrial processes, mining, manufacturing or other industrial sectors.
Machinery and equipment—Machinery and equipment belonging to or to be acquired by an eligible business which is directly related to the manufacturing or industrial process of that business.
Program—The Machinery and Equipment Loan Fund Program.
Project—The acquisition, installation or upgrade of machinery and equipment by an eligible business at a site located within this Commonwealth.§ 71.103. Application evaluation.
In addition to the factors in the act for application evaluation, the Department will also review the following factors pertaining to business evaluation, project criteria and public benefit criteria:
(1) Business evaluation. The historical performance of an eligible business will be evaluated to assess its ability to repay the MELF loan. Specifically, this evaluation will include:
(i) Financial performance of the business. This involves an evaluation of 1 year pro forma projections and the prior 3-year financial performance, including an examination of income statements, balance sheets and cash flow statements. Start-up firms are required to submit 3-year pro forma projections.
(ii) Financial performance of the owners. This involves an evaluation of the current personal financial statement of the owners of the business.
(iii) Market performance. This involves an evaluation of the local and national market and the applicant’s current and projected position or market share.
(iv) Management ability. This involves an evaluation of the experience and skills of the proprietor, partners or officers. This includes general business experience as well as specialized experiences in the particular industry.
(2) Project criteria. The merits of the proposed use of loan proceeds and other project funds will be assessed to determine the ability of the eligible business to repay the loan. Specifically, this evaluation will include:
(i) Projected sales and revenues. This involves an assessment of the validity and accuracy of the projections.
(ii) Projected financial statements. A thorough credit analysis will be performed using both historical and projected financial statements.
(iii) Value of the assets and collateral. Appraisals, when appropriate, will be required to assist the Department in evaluating its ability to secure the loan.
(iv) Changes in market strategy or management strategy, or both. Proposed significant changes in the business plan, market strategy or management team will be reviewed.
(3) Public benefit criteria.
(i) The total full-time equivalent number of jobs to be created or retained, or both, as a result of the project.
(ii) The number of jobs to be created or retained, or both, for each MELF dollar invested.
(iii) The private investment to be leveraged as a result of the MELF investment.
(iv) The increase in productivity.
(v) The strategic importance to the Commonwealth of the industry or firm being assisted and the area being served.
§ 71.104. Application process.
(a) An application can be obtained from the Department of Community and Economic Development, Private Capital Financing Office, Commonwealth Keystone Building, 4th Floor, Harrisburg, Pennsylvania 17120, (717) 787-6245.
(b) Applications will be reviewed in the order in which they are received by the Department.
§ 71.105. Effect.
This chapter is intended solely to provide guidance to the general public and program applicants and to interpret statutes and regulations. The chapter may be relied upon insofar as it binds the Department to follow a stated course of action. The Department may revise this statement prospectively.
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