Tom Hoagland is the first to admit the Providence Business Loan Fund he leads as director has a checkered history and limited hopes of attracting new funding anytime soon.
But the fund nonetheless is on the upswing, he says.
In the last three years, the fund has lent $2.4 million in 11 loans. And Hoagland’s goal is to secure between 10 and 12 PBLF loans per year, ranging in value from $50,000 to $250,000.
Increasing the number of annual loans, he said, will require more awareness within the business community of the fund’s turnaround since it was forced to suspend lending in 2012 due to high default rates.
“It’s not a steady flow [of applications] by any means,” said Hoagland, explaining they arrive in fits and starts, with months going by with no interest.
On Aug. 7 Providence Mayor Jorge O. Elorza, who is running for re-election, toured three recent successful PBLF loan recipients to talk up the fund’s improved management and its successes under his tenure as mayor.
The mayor in a statement said that since 2015, when the fund’s name was also changed, it has built “a lending portfolio that specifically targeted businesses across a broad spectrum of fast-growth industries.”
Elorza told Providence Business News in a separate interview that the program now has “a clean bill of sale” after years of being “mired in controversy.”
Formerly known as Providence Economic Development Partnership, the fund was suspended by the U.S. Department of Housing and Urban Development in 2012. HUD found PEDP’s default rate to be 60 percent and the city was forced to write off $1.5 million in delinquent loans.
That year, Hoagland came onboard and commercial lending recommenced in late 2013.
By May 2017, PBLF had outstanding loans of roughly $10 million. Today, PBLF’s lending pool rests between $1 million and $1.5 million, with $9 million in outstanding loans, said Hoagland.
Repayments of outstanding loans – roughly $600,000 annually – are what the fund uses to make new loans. It hasn’t received new funding in several years, Hoagland said.
Currently, there are 30 active loans, five of which are in default. Four of those five were made in 2011 and 2012 and half of the businesses that have defaulted on their loans are out of business. The fifth defaulted loan was made in 2017.
Despite the improvements, neither Hoagland nor Elorza expects any new federal funding to help expand lending in the coming year.
Hoagland, however, is optimistic about banks boosting interest in the fund. Banks “have [previously] been a source of potential applications” and may be again, he said.
For now, he feels PBLF’s lending pool is enough to meet his goal.
“Our portfolio is generating enough dollars to keep us relending,” Hoagland said.
PBN staff writer Scott Blake contributed to this report.
