Q. The economy has hit my business hard over the past two years and now my suppliers are squeezing my access to credit for materials. To make matters worse, the negative impact on my cash flow over the past year has impeded my ability to obtain the working capital needed to prepare for the upcoming season. Is there any help for me?
 
A. Yes. FAME's Economic Recovery Loan Program is a direct loan program that provides financing that assists businesses to remain viable and/or improve their productivity. FAME is able to provide up to $300,000 in financing at 2% above the WSJ Prime rate to businesses that may not be able to obtain financing from their conventional sources. Click here for more information.     
 
Note:   Due to the economic climate, and the overwhelming need expressed for this program, we're highlighting and providing more information under the Featured Program section in this issue of the Business Quarterly.

 

 

FAME Economic Recovery Loan Program
 
As you know, FAME is involved in a full spectrum of direct loan programs, but by far the most active program is the Economic Recovery Loan Program. Under this program, FAME provides loans of up to $300,000 to a business that is: 1) unable to obtain financing from conventional means; and/or 2) unable to obtain the full level of financing needed (a "gap" in need). This program gives businesses a valuable resource to help them remain viable and/or assist with implementation of expansion projects.
 
With adverse economic times negatively affecting more and more businesses in the state of Maine, the need for access to capital has increased to a level higher than conventional lenders may be able to provide. FAME's Economic Recovery Loan Program fills that need with access to funds at favorable rates. 
 
Reasons your business may benefit from this financing are:
 
1) The Economic Recovery Loan Program can be used to meet working capital needs, equipment acquisition needs, and to provide a financing need "gap" as part of an overall cooperative financing package for a business.  
 
2) The Economic Recovery Loan Program can be in a subordinate collateral position so long as the proposal is viable.

 

3) The Economic Recovery Loan Program can be used in conjunction with FAME loan insurance for a company and coupled with programs offered by various regional economic development agencies to meet a company's needs.
 
4)  The Economic Recovery Loan Program has the flexibility to develop creative payment scenarios that can be adjusted to meet a specific company's needs. 
 
Click here for an application for the FAME Economic Recovery Loan Program.

 

 

The Second Regular Session of the 124th Maine Legislature adjourned Monday, April 12, 2010. The "short session" is limited to budgetary matters, emergencies and necessary agency bills, so fewer bills--423 compared to 1,496 during the First Session--were considered by lawmakers. Regular bills and resolves become effective July 12, 2010, ninety days after adjournment.  

 
The overall tone of the session was bipartisan, which was a welcome surprise in an election year beset by budgetary problems. Members agreed by a two-thirds vote to enact a supplemental budget that included further cuts to education and human services. A scaled-back bond package was ultimately approved by two-thirds majorities, as well, and many initiatives (see below) will appear on the June ballot. If ratified by voters, Question 4 (the economic development bond) will, among other things, recapitalize FAME's Economic Recovery Loan Program by $3 million and will provide $1 million for seafood/agricultural food processing grants to be administered by FAME. 
 
FAME won enactment of its initiatives, including:  LD 1530, An Act to Facilitate Recovery Zone Facility Bonds, Recovery Zone Economic Development Bonds and Qualified Energy Conservation Bonds (now PL 2009, Chapter 517); LD 1743, An Act to Provide for the 2010 and 2011 Allocations of the State Ceiling on Private Activity Bonds (now P&SL 2009, Chapter 33).

The Business, Research, and Economic Development (BRED) Committee held confirmation hearings for six individuals nominated by Governor Baldacci to serve on the FAME Board:  Shep Lee of Cape Elizabeth; Mike Mahoney of Cape Elizabeth; John Sevigny of Portland; Reis Hagerman of Scarborough; Evelyn Silver of Bangor, and Rosaire Pelletier of Madawaska. All nominees were favorably recommended by the committee to the Senate, which approved them.
 
Some bills of possible interest to the business community:
 
L.D. 1, An Act to Stimulate Capital Investment for Businesses in Maine, formerly known as "Fund of Funds," was amended by the BRED Committee and approved by the full Legislature and Governor Baldacci. The new law encourages the Maine Public Employees Retirement System to invest in venture capital funds that make reasonable efforts in Maine businesses in targeted technology sectors. FAME would be authorized to approve refundable tax credits equal to up to 80% of certain investments. Tax credits would be limited to $20 million, with no more than $4 million being placed at risk in any single venture capital fund.  To view the text of the new law, please visit: http://www.mainelegislature.org/legis/bills/bills_124th/billtexts/SP001004.asp  

L.D. 1449:  An Act to Expand Tax Incentives for Visual Medial Productions, was enacted in modified form.  It makes certain film productions eligible for FAME's Seed Capital Tax Credit, among other things. 

LD 1826-An Act to Authorize Bond Issues for Ratification by the Voters for the June 2010 Election:  A $57.8 million compromise bond package designed to create jobs and save railroad lines in Maine won approval in the final hours of the session. The bond package includes:

 

There will be one people's veto question and four bond questions on the June ballot. Additionally, there will be primary gubernatorial nominee choices for those enrolled in a political party. There are no citizen initiatives, no Constitutional resolutions and no legislative referenda. Since there is only one people's veto question, that question will be first on the ballot. 

Question 4 pertains to economic development and has implications for FAME.  It reads:

"Do you favor a $23,750,000 bond issue to provide capital investment to stimulate economic development and job creation by making investments under the Communities for Maine's Future Program and in historic properties; providing funding for research and development investments awarded through a competitive process; providing funds for disbursements to qualifying small businesses; and providing grants for food processing for fishing, agricultural, dairy and lumbering businesses within the State and redevelopment projects at the Brunswick Naval Air Station that will make the State eligible for over $39,000,000 in federal and other matching funds?"

 
The Economic Recovery Loan Program (ERLP) provides subordinate (gap) financing up to $300,000 to assist businesses in their efforts to remain viable and/or improve productivity. The funds are also used for energy related loans, hi-tech loans, lobster industry loans, and quick response loans for natural disasters.

Since 1993, 321 ERLP loans have closed for a total of $51,992,655. These loans helped retain 13,600 jobs and create another 2,487 jobs. As of March 31, 2010, there were 95 loans outstanding for $13,286,898.
 
Due to the current economic climate in the state, as well as the outlook through 2011, demand for these funds by Maine businesses attempting to weather the economic storm will be significant. 
To view the order and wording of other bond questions on the June ballot, please visit the Secretary of State's webpage at http://www.maine.gov/sos/news/2010/ballot-question-order-drawing.htm