In an effort to assist businesses that are struggling financially as the result of the COVID-19 pandemic and the associated social distancing restrictions, the State and Federal government have established new loan programs that may offer a source of much needed funding for small business:
Pennsylvania Industrial Development Authority
The Pennsylvania Industrial Development Authority announced that a Working Capital Assistance Fund has been made available for struggling businesses. The fund allows for a total of $60 million in working capital loans. In York County, these loans will be delivered by the York County Economic Development Corporation, which is an affiliate of the York County Economic Alliance.
Qualifying businesses with less than 100 full-time employees can borrower up to $100,000. Applicants must verify the direct business expenses incurred by the business over the past 3 months, and satisfy certain industry specific requirements. Secured by business assets, the loans are for a 3-year term, amortized over 12 years with a 12 month deferral on payments.
The application is not as yet available to the public, but business owners can take steps to prepare for the application by gathering W-9 forms and developing an operating expenses list. A comprehensive list of information needed for the application along with other loan highlights can be found here.
U.S. Small Business Administration (“SBA”)
On March 19, Governor Wolf announced that the SBA’s Economic Injury Disaster Loans have been made available in all 67 counties in Pennsylvania. These loans provide small businesses and non-profits up to $2 million in funds to help pay for bills that cannot be paid due to the impact of the pandemic. These loans are only available for businesses that cannot receive credit elsewhere. Interest rates are 3.75%. for businesses and 2.75% for non-profit organizations. Repayment terms are determined on a case-by-case basis and can be for a term of up to 30-years. The loan application is currently open to applicants. The Wolf Administration’s guidance on these SBA loans can be found here.
As always, the Business Group at Stock and Leader can help business owners navigate funding sources along with other legal needs. Contact a member of Stock and Leader’s Business Law team today: