On Monday, June 8, 2020, the Wolf administration announced that it will use $225 million from the Commonwealth’s federal CARES Act allocation to provide aid to Pennsylvania small businesses that did not participate in the Paycheck Protection Program and experienced financial difficulties as a result of the forced shutdown orders instituted to slow the spread of COVID-19.
The funding is in the form of grants available for small businesses with a full-time equivalent employee count of 25 or less, and less than $1 million in revenue based on previously filed tax returns. Businesses are required to apply through one of the state’s 17 Community Development Financial Institutions (CDFIs), nonprofit community-based lenders that target underserved small business communities in their region. CDFIs include community development banks and credit unions, and non-regulated institutions such as non-profit loan funds or venture capital funds.
Eligible businesses can receive a grant of no more than $50,000; had to be in operation on February 15th; and the health crisis had an “adverse economic impact and makes this grant request necessary to support the ongoing operations of the applicant,” according to guidance issued by the Pennsylvania Department of Community and Economic Development (“DCED”).
The funds will be distributed on a first-come-first-served basis, and applicants are limited to one grant. It is expected that grant applications may be submitted by the end of the month of June, 2020.
The $225 million will be split among three programs:
- The Main Street Business Revitalization Program will make $100 million available for grants to small businesses that experienced losses as a result of the March 19th order to close non-life-sustaining businesses. This portion of the grant program will also be available to small businesses that have incurred or will incur costs to adapt to new business operations related to the health crisis.
- The Historically Disadvantaged Business Revitalization Program will designate $100 million for socially and economically disadvantaged individuals who are majority owners and oversee management and daily operations of businesses that experienced losses as a result of the business closure order in March or will incur costs to adapt to new business operations because of the health crisis.
- The Loan Payment Deferment and Loss Reserve Program reserves $25 million of the $225 million to allow CDFIs to offer forbearance and payment relief for businesses in their existing portfolio that are financially struggling due to the economic fallout of the coronavirus. This $25 million is also intended to shore up the financial position of CDFIs experiencing increased defaults in their existing loan portfolios.
Governor Wolf has indicated that this grant program is designed to enable small businesses to use the funds to cover operating expenses incurred during the shutdown and to help them in transitioning to reopening. Wolf said. “The grants will also cover technical assistance including training and guidance for business owners as they stabilize and relaunch their businesses.”
Stock and Leader’s COVID-19 Business Response Team will monitor developments regarding this new grant program. For further guidance please contact any of the members of the firm’s COVID-19 Business Response Team: