Alternate Financing RoutesStates and banks are teaming up to offer financing programs that provide not only capital, but also benefits all around.

When David Nadeau and his partner, Rick Edwards, went looking for financing this time last year, they had several goals: to buy out their primary investor and become co-owners of their Portsmouth, Rhode Island, manufacturing company,Renova Lighting Systems Inc.;to get short-term working capital for the company's operations; and to secure long-term financing to upgrade outdated manufacturing equipment and grow the business. In their search, they heard about Job Bank, a state partnership with Citizens Bank that offered a low interest rate to businesses that agreed to add jobs, but it didn't look like the program would be renewed for 2006. So, they decided to go with a traditional loan at a higher rate and with more restrictive terms.

"Literally a day before the closing, we got a call from the bank saying the program was back on," says Nadeau, 42. "It was a really nice, last-minute boost for us." The bank offered to swap the paperwork, so Nadeau and Edwards got the Job Bank financing, which offered an interest rate of just under 5 percent on a five-year loan for $300,000. And they were not restricted in how they used the money, a change from the traditional term loan. The hitch? The pair had to agree to add seven jobs during the next three years. "That was already built into our longer-term plan," Nadeau says. "It just might have happened later."