The Vermont Economic Development Authority loaned $64.3 million in 2013 to Vermont businesses and farms in fiscal year 2013. The capital helped leverage another $120 million in private funding, for a combined $180 million economic boost, according to the quasi-governmental agency’s annual report. VEDA held its 39th annual meeting Friday.
VEDA was created in 1974 to help bolster job creation and per capita income in Vermont. The agency reports to the Legislature and is overseen by a board of directors that includes some officials from state government, including Treasurer Beth Pearce and the secretaries of the agencies of Commerce and Community Development and Agriculture, Foods and Markets, and the commissioner of Forests, Parks and Recreation.
VEDA borrows money from the state and from the private market, then redistributes it as loans to Vermont businesses.
“This year, the Authority saw commercial, small business and agricultural financing demand normalize to pre-disaster levels.”
In the preface to its annual report, VEDA’s chief executive officer Jo Bradley and chair Leon Graves said lending in the most recent fiscal year reflected the state’s recovery from Tropical Storm Irene. Graves is now vice president of Dairy Marketing Services in New England, and formerly served as a state lawmaker and agriculture commissioner.
“This year, the Authority saw commercial, small business and agricultural financing demand normalize to pre-disaster levels,” they wrote.
At $37.5 million, VEDA’s revenue bond program comprises about one-third of the organization’s total approved loans. Close to half of that total bond financing was approved for Casella Waste Management to restructure its debt; the other half is divided among six other businesses, schools and trusts.
An agricultural loan program is VEDA’s second-largest offering. Whereas bond financing was approved for seven business interests, 260 loans totaling almost $17 million were approved for farms.
John Ryan directs the agricultural development program for the Vermont Sustainable Jobs Fund. As a coach who works closely with farms and food producers that are looking to expand, he said VEDA’s Agricultural Credit Corp. loan program is often the first place they look for financing — even though it may not be the lender businesses ultimately choose to borrow from.
Ryan said VEDA’s agricultural specialization is evidenced by the organization’s knowledgeable loan officers. Although the loans themselves, in some cases, are more expensive than what private banks offer, the organization often is perceived as easier for food and agricultural producers to work with, he said.
“They’ve been interested … in the real success of the business, not just writing loans and collecting monthly payments,” Ryan said.
Direct loans worth almost $14.5 million and small business credit worth more than $11.7 million also were approved. Still more loans were approved for small businesses, local development corporations, mortgage insurance, and projects ranging from drinking water to technology to energy improvements.
Bradley said in an interview that part of VEDA’s value comes from the organization’s leveraging power. She said VEDA takes “second position” on many commercial loans, meaning that VEDA is willing to be paid back only after the private banks from which businesses also borrow.
“That helps a project get done because a bank (may be) thinking something is more risky than something they want to do. So they take a piece of it with the first position, and we go behind them,” she said.
In the coming year, VEDA will expand financing for energy improvement projects through its Sustainable Energy Loan Fund. The program’s creation was finalized by the governor’s signature in June and funded with $10 million from the Treasury.
Bradley said it’s significant to borrow from the Treasury — rather than the private market — to fund energy projects.
“It allows us to have some fixed-rate lending,” Bradley said. “A lot of the energy projects are based on contracts with the utilities to buy energy at a certain price. Since you have a fixed source of income, you need a fixed liability to match that.”
