That new equipment means the company can bring back about two workers furloughed during the pandemic, and eventually could hire more, Szczekocki said. The loan is from a Racine County Economic Development Corp. loan program financed by the federal CARES, or Coronavirus Aid, Relief and Economic Security, Act.
“It’s not always obvious, and may not be your first go-to type of financing you’d look for, but there’s definitely money available, and it’s inexpensive money and it’s available right now,” he said. “It’s very attractive financing with a 10-year term, zero-percent interest for a period of time.”
Hestia is the first business approved for the loan through the program, said Carolyn Engel, business finance manager of the Racine County EDC. The organization in July was awarded $3.6 million by the U.S. Economic Development Administration to create the loan fund.
“It had two goals: investments and jobs,” Engel said. “We’re really pushing this toward equipment that is really going to create or retain jobs, or really small working operational loans.”
The loans can be interest free with no principal payments for the first 18 months, with no closing costs. They can be up to $250,000, but many will be as low as $20,000 to let more and smaller companies participate, Engel said. She expected about 29 companies in total would receive loans through the program. The investments and jobs must be made within Racine County.
“We’re challenged in getting them deployed over two years, but I don’t think it’s going to last that long,” Engel said of the $3.6 million available.
Szczekocki said Hestia is putting the money toward buying a new heat treating system that can work on different types of automotive products than the company’s current equipment. Hestia heat treats steel components for other manufacturers, including pins for John Deere US equipment or, in a segment with increasing demand, gun parts, he said.
The pandemic has driven down demand by more than 20%, forcing layoffs and reduced hours, he said. The company has about 20 employees and runs its equipment 24-7 during normal economic times.
“It gets us into some new markets,” Szczekocki said. “We will be looking at adding some more equipment and potentially some more jobs down the road. This hopefully is just the start of this type of work.”
Hestia secured a loan from Johnson Bank in Racine and combined it with the Racine County EDC financing to buy the equipment, Szczekocki said. A benefit of buying now, beyond stimulating more work, is the machinery’s price is discounted.
“A lot of the equipment manufacturers were slow in this downturn to this pandemic and obviously they were hungry for work, so I was able to negotiate a pretty good price,” Szczekocki said. “It worked out for them timing-wise, and worked out for us timing-wise.”