As propane shortage worsens, program will work with banks to provide expanded lines of credit for Wisconsin distributors
MADISON, WI. January 27, 2014 – The Wisconsin Economic Development Corporation (WEDC) Board of Directors today approved an emergency program that calls for issuing up to $5 million in loan guarantees to financial institutions for new or expanded lines of credit to propane distributors in Wisconsin.
The action, approved unanimously at an emergency meeting of the board this afternoon, was taken in response to problems caused by the growing propane shortage across the Midwest. The wholesale cost of propane is rising rapidly in response to the shortage, and as prices rise, many commercial retailers of propane have exhausted their current lines of credit.
Expanding those lines of credit will help ensure that propane distributors are able to obtain propane on the wholesale market and deliver it to consumers across the state.
Under the terms of the program, WEDC will guarantee up to 80 percent of a new or expanded line of credit up to $100,000 per distributor. That guarantee should make financial institutions more willing to extend or create lines of credit to distributors, said Reed Hall, Secretary and CEO of WEDC, the state’s lead economic development agency.
“This shortage is a serious problem not only for residents who rely on propane to heat their homes, but also for the local dealers who currently do not have the funds to purchase more propane at these high prices,” Hall said. “With this program, WEDC will work with financial institutions to help out those dealers, which in turn will provide some relief to homeowners.”
Financial institutions or propane distributors seeking more information about the emergency loan program should contact the WEDC Regional Account Manager in their area. Information also is available on the WEDC website at inwisconsin.com/propane.
WEDC received input from the Wisconsin Department of Financial Institutions and the Wisconsin Bankers Association in developing the program.
The WEDC board vote comes the same day that Governor Scott Walker met with propane industry representatives and state government officials, and announced a series of actions to protect citizens who rely on propane for heat.
In addition to the WEDC loan program, Governor Walker directed the Wisconsin Housing and Economic Development Authority (WHEDA) to proceed with a $3 million loan guarantee program. WHEDA will provide loan guaranties to banks of 50% of a total loan for dealers to purchase propane.
The governor also instructed the Department of Administration’s Division of Energy Services to release an additional $7 million in energy assistance benefits, for a total of $8.5 million in additional funds, to help support low-income Wisconsin residents who use propane to heat their homes.
On January 25, Governor Walker declared a State of Emergencyin response to the propane shortage. The declaration puts all state agencies on alert to be prepared to assist as needed in response to the cold weather snap and propane shortage.