Nearly a year later than expected, Providence is back in the commercial-lending business.
The Providence Economic Development Partnership’s Revolving Loan Fund, suspended by the U.S. Department of Housing and Urban Development in 2012 for loose underwriting and improper spending by administrators, was allowed to restart last week under city control.
The federal clearance will allow the city to reactivate a pool of $1.4 million in capital, seeded by payments from previous loan recipients, that had been frozen for roughly 18 months.
And it should speed up PEDP small-business financing through the city’s annual stream of federal Community Development Block Grant funds, said Providence Economic Development Director James Bennett.
“We have not been as active as we had been and want to be,” Bennett said. “Right now we have access to another $6.5 million we could pass through and get out to businesses.”
“We did take write-offs and really scrutinized our loan portfolio,” Bennett added. “We are getting a much-better relationship with HUD.”
Last November, Bennett had expected the full PEDP financing program to be back up at full speed and under local control by the end of last winter, but acknowledged the process had taken longer than anyone anticipated.
As for what delayed the authorization, Bennett said there was nothing specific HUD was demanding the city change in the program, this just turned out to be the length of the federal process. The government shutdown added an additional delay, he added.