HCDC is still open and ready for business

OK so now it is official, we are in the longest recession since 1982, and things may even get worse before the recovery occurs.  But guess what?  HCDC is still open and ready for business.  We have money to lend for business expansion, the business incubator has space and coaching available for entrepreneurs, and the Economic Development Office is poised to offer incentives and relevant information to spur business investment and job growth.

That’s possible because during over our 25 years of operations, HCDC never followed or became captive to the business fads of the day.  The incubator did not get caught up in the dot-com boom and subsequent bust; and the lending programs avoided the stated income or “only-collateral-needed” loan craze, continuing to make loans and investment decisions the old-fashioned way. 

HCDC approves loans based on reviews of financial statements, which are reconciled by tax returns, and then verified by operating cash flow or reasonable projections.  The economic development projects have to make business sense: there must be a demand for the services or products from a sufficient number of customers that are ready, willing, and able to buy.  If so, then the project or loan is approved.  If not, then it doesn’t receive HCDC assistance. 

This does not mean that every HCDC approved venture succeeded.  There are always inherent risks in the marketplace, but there is a significant difference between taking rational risks and taking foolish risks. 

The SBA 504 loan program did not skip a beat nor did it miss a bond sale during the recent credit crunch.  Unlike many other financings the 504 bonds still sold, and we anticipate these sales to continue, unabated.  Interest rates on 504 loans for January, 2009, are at 6.7% fixed for a term of 20 years.  The Ohio regional 166 loan program has money available at 2.0% or the greater of 2/3’s of prime.  The most recent HCDC 504 loan portfolio delinquency rate is at 0.08 percent.

There are tremendous opportunities now for those businesses and entities capable of taking advantage of situations where there may be fewer potential customers but also fewer competitors.  It’s also true that economic development programs that HCDC administers have historically been counter-cyclical, as the demand for them tends to increase in recessionary times. The recession of 2008-2009 hopefully will continue this trend.