Philly Gets $275M Loan To Pay Vendors

PHILADELPHIA - Mayor Michael Nutter says the city will borrow $275 million to pay vendors that have not received money since mid-July because of a budget crisis.

Nutter says the short-term loan from JPMorgan Chase & Co. will allow the city to pay about $200 million of the $225 million owed to vendors. He says the rest of the loan will help the city keep cash on hand.

"We're very concerned about those who have business relationships here with the City and we don't want to damage those firms or those relationships in any way, shape or form," Mayor Nutter told reporters Tuesday.

The interest rate on the loan starts at 3% but jumps to 8% come December 1.

Nutter says the city needs state lawmakers to pass a bill allowing Philadelphia to temporarily increase the local sales tax and defer some pension contributions. The bill is scheduled for a vote by the state House Sept. 8.

If lawmakers do not act by Sept. 18, Nutter says about 3,000 city employees will be notified of layoffs to begin Oct. 2.