THE LATEST ON THE CORONAVIRUS (COVID-19) OUTBREAK
Loan Plans to Be Put in Place to Help Small Businesses Affected by COVID-19
On Wednesday afternoon, the Commonwealth Financing Authority (CFA) authorized the transfer of $40 million to the Pennsylvania Industrial Development Authority (PIDA). The funding will ultimately be combined with existing funds in the PIDA’s Small Business First Program and will be used to provide zero-interest loans to small businesses. Over $60 million for loans will be available to businesses with 100 or fewer full-time employees.
“Small businesses are the lifeblood of our communities and of our Commonwealth,” Pennsylvania Senator Joe Scarnati said. “The current public health emergency resulting from COVID-19 has left many businesses facing hardship. It is imperative that we do all that we can to help these establishments weather this storm.”
Scarnati explained that based on the actions taken by the CFA on Wednesday, as early as next week, PIDA will have the ability to launch the expanded loan program.
Loans of up to $100,000.00 will be available to small businesses to use as working capital. Interest rates are being dropped from approximately 3 percent to 0 percent. Detailed guidelines for the program are still being developed at this time. In addition to a 0 percent interest rate, there will be no application fees and the terms will include no payments and no interest during the first year of the loan.
Scarnati noted that more details about this program and instructions for how small businesses can apply will be forthcoming as soon as they are established by PIDA.
In addition to that program, Jill Foys, Executive Director of the Northwest Commission which covers Venango, Forest, Clarion, Warren, Erie, Crawford, Mercer, and Lawrence Counties said that the United States Small Business Administration (SBA) has disaster relief funds available in the form of loans as well.
“These are usually for individual acts like floods or tornadoes,” Foys said. “This is being used for COVID-19 now.”
Foys said local and regional economic development agencies have worked with the Pennsylvania Department of Community and Economic Development (DCEC) to collect information from small businesses that have been negatively impacted by the virus or feel they will be impacted by the virus.
After information was collected from all 67 counties in Pennsylvania, the governor submitted a request to the Federal government so that small businesses and 501c3 nonprofits can apply for loans through the SBA.
“It is the SBA Economic Injury Disaster Loan Fund,” Foys said. “It will help businesses with low-interest and longer terms on a case-by-case basis.”
In this case, the loans are intended to help businesses with a loss of revenue, Foys said.
“It is a cash flow issue,” Venango County Commissioner Sam Breene said. “If the small businesses can get any injection of money they can get, it is going to be hugely beneficial.”
Foys said these loans, which would carry an interest rate of 3.75 percent for small business (up to 500 employees) and 2.75 percent for non-profits and can be for up to $2 million with a term as long as 30 years, could help businesses with payroll, accounts payable, and standing debt.
“Those are things that could absolutely crush a business if it can’t meet those payments,” Foys said. “This is disaster relief that could help them keep the light one, people employed and the businesses alive. Without this injection for funding, they may not have a chance.”
As of Wednesday evening, Pennsylvania was still waiting to hear back from the federal government.
“Hopefully, the turnaround time is a few days,” Foys said.
According to Foys, the DCED needed to collect the information from all 67 counties so that the governor could ask for the funds, and it received over 300 responses.
“The DCED is still collecting information across the commonwealth so that economic development agencies and the DCED can start working on policy and programs,” Foys said. “We are trying to figure out what comes next for our small businesses. There may be things they need that we don’t have tools in our toolbox for right now.
“We need to put our heads together and find out what services and programs we can provide so the businesses can try and restore post-COVID-19. The DCED wants to continue to hear from small businesses.”
Foys said in addition to the SBA loan, the Northwest Commission is offering the option of three months of interest-only payments on existing loans with the Commission.
Foys also said her office has some of the tools in its toolbox and her staff are answering calls and questions and hearing from businesses on what they need.
“This is a time whee we have to listen to our businesses and share that information with state and local partners and craft what the messages should be to the state and federal funders,” Foys said. “We need to put together and propose programs to helps small businesses. We don’t know what they need right now. This is unchartered territory. But, we will be there for our business and answer questions the best we can. If we don’t know the answer, we will try to find those answers.”
Foys believes there will be additional loan programs coming, as well. In fact, the one at the top of this story was announced after the interview with Foys.
“Since 1967, our programs and services have always adapted to the changing needs of our businesses,” Foys said. “That will continue as we move through these uncertain times.”
To contact the Northwest Commission visit it online at http://www.northwestpa.org/ or call its office at 814-677-4800.
For businesses in Jefferson and Clearfield Counties, contact the North Central Commission at 814-773-3162, or visit it online at http://www.ncentral.com/.
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