Pennsylvania's capital city of Harrisburg, reporting that two-thirds of 44 loans made under the city's small business loan program are delinquent, expects to soon announce the name of a collection agency that will chase the outstanding loans "at no charge".

Mayor Linda Thompson says that more than $800,000 is delinquent. The same collection agency also will be in charge of pursuing delinquent utility bills totaling an estimated $674,000

The city has a hit list of the 31 delinquent small-business lendees. Thompson said she is willing to work with business owners who still owe but that collection efforts put a burden on an already depleted city staff. "We are always trying to work with people to restructure loans, but they have made no effort to negotiate with us," she said.

Of the outside collection agency: "They are not expecting any percentage of the collections," she said. "What they collect will go 100% back to the city. Nothing will come off the top to them."

In related news, Harrisburg will skip $5.3 million of debt payments due next week, the first time the city has defaulted on its general obligation bonds, to ensure there is enough cash to fund vital services.

The city is mired in $326 million of debt due to retrofits and repairs of its troubled trash incinerator.

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