BFA Keeps Credit and Cash Flowing to NH Businesses

At a time when many businesses are complaining they cannot access the funding and credit they need to grow and move forward, the Business Finance Authority (BFA) has been working with banks to increase lending.

The Business Finance Authority was created in 1992 to foster economic development and new jobs in NH by working with banks, businesses, nonprofits and economic development organizations to develop programs that expand the availability of credit for businesses.

To accomplish its mission, the BFA provides loan guarantees, loan insurance and tax credits. It also issues bonds.

In FY 2010, the BFA closed $214,975,321 in loans and guarantees for 17 businesses and organizations, preserving 840 jobs and creating 549 new jobs. The largest deal it closed was $130 million for Elliot Hospital in December 2009, according to its annual report. Since its inception, the BFA has helped about 4,500 businesses access more than $1.2 billion. Of that, $360 million was provided through loan guarantee and insurance programs, and the balance was through issuing bonds.

The primary criteria the BFA considers for project selection are job creation and retention and job quality. It also considers project location, financial leverage and project feasibility. Projects located in disadvantaged communities and areas with higher unemployment are given stronger consideration.

The BFA's tax-exempt industrial development revenue bonds can be used by manufacturers to acquire, renovate and/or construct buildings or to purchase land and new equipment. Those bonds can be used for projects ranging in size from $500,000 to $20 million. Among the companies the BFA has assisted by issuing bonds is Lonza Biologics, which recently expanded its facility at Pease International Tradeport. Nonprofits can use 501(c)(3) bonds to refinance existing debt as well as to acquire, renovate and construct buildings, and purchase land and new equipment.

The BFA also creates a comfort zone for banks to make loans by providing loan guarantees to help small businesses that don't qualify for conventional bank financing. When J-PAC, a medical and pharmaceutical contract manufacturing and packaging facility in Somersworth with 100 employees, was having difficulty securing the operating funds it needed during a difficult time, the BFA stepped in and guaranteed a $1.5 million line of credit for the company through Kennebunk Savings Bank in Maine, says Jack Donovan, the BFA's executive director.

The BFA was also able to save a deal when the recession hit and threatened the loan for the construction of an extended-stay Radisson Hotel in Concord. The BFA guaranteed a $7.5 million loan through Mascoma Savings Bank. Had we not, the deal would not have gone through, Donovan says.

The BFA also offers programs to help cities, towns, and economic development organizations.

Donovan says the recession and slow recovery has created a shift in demand for BFA loans from funding expansions and new projects to refinancing deals. The BFA is seeing an increase in activity for loan guarantees in the past couple of years. Banks are cautious. So we've seen an increased demand, Donovan says.