Small business lending in FY2012 set a record with the Small Business Loan Program closing 50 new loans totaling $7.4 million. Small business loans can be made for as much as $350,000 and may provide financing for both fixed assets and working capital. Small business lending has been the fastest growing segment of the VEDA portfolio in the last several years.
Some years ago, VEDA worked with the Administration and Legislative leaders to ensure Vermont’s burgeoning software and technology sector grew in Vermont and stayed in Vermont. Given that technology company assets are usually in the form of intellectual property or other “soft” assets, lending to these types of companies is often difficult. The State of Vermont committed $500,000 of “Full Faith and Credit” to back a Technology Loan Program at VEDA. VEDA continues to make Technology loans, but without the use of additional reserves.
Travel and tourism is an extremely important sector, as it imports capital into Vermont. As its importance to Vermont’s economy grew, VEDA’s lending criteria were expanded in the early 1990’s to include the travel and tourism sector. Hotels, lodging and skiing facilities account for 68% of the total Travel and Tourism portfolio.
Taken as a whole, the healthcare industry is one of Vermont’s largest employers. VEDA has a small program that helps businesses in the healthcare sector with financing for the conversion to electronic records. VEDA’s 504 program can also be used to assist businesses in this sector with real estate or equipment purchases.
In 1989, VEDA started making agricultural loans to assist farmers in restructuring their balance sheets, which had been negatively impacted by a cyclical downturn in the dairy industry. In 1999, the Vermont Agricultural Credit Corporation (VACC) was formed, and now, agricultural lending through VACC has grown to comprise almost half of VEDA’s direct loan portfolio. VACC’s portfolio, initially more than 90% dairy, is becoming much more diversified as the Vermont agricultural economy expands to include new types of farm operations.
VEDA’s role in financing manufacturing has a long history, dating back to when VEDA was organized in 1974. VEDA’s manufacturing portfolio at June 30, 2012 totaled $37.8 million, with the largest segments being in equipment and components, food and beverages, and lumber, wood and furniture. Manufacturing accounts for 21% of VEDA’s total loan portfolio.