WEST CHESTER (March 20, 2020) – State Senator Andy Dinniman announced this week that Pennsylvania has moved $40 million from the Commonwealth Financing Authority (CFA) to a small business loan program to aid businesses impacted by the Coronavirus (COVID-19) outbreak.
These funds will be combined with $21 million in other available funds for a total of $61 million in the Small Business First Fund (SBF). The shift was the result of a partisan push, along with the governor’s approval.
“While we fight this unprecedented pandemic, we must work diligently and swiftly ensure the sustainability of the small businesses that make up the backbone of our economy,” Dinniman said. “These loans will are one of several positive steps we must take towards providing relief for small businesses across the Commonwealth.”
The Pennsylvania Industrial Development Authority (PIDA) will administer the SBF with $61 million available initially for business assistance. These funds will be used to fund working capital loans of up to $100,000 directly to small businesses (those that employ 100 or fewer persons). The interest rate is currently 3 percent. However, the PIDA board can adjust the interest rates to as low as 0%.
The SBF is already equipped to assist small businesses quickly because this is already its intended purpose. It has the structure along with the needed regional infrastructure to help small businesses immediately, including partnerships with local a Certified Economic Development Organization (in Chester County, the Chester County Economic Development Council) in preparing and submitting an application for approval by the Authority. As these loans have a maximum amount of $100,000, they can all be approved by the staff and thus, if all requirements are met, and a complete application is submitted, each loan can be turned around rather quickly. At the federal level, Dinniman noted that the U.S. Small Business Administration (SBA) has Economic Injury Disaster Loans for small businesses and eligible non-profits.
The loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
However, according to the Chester County Economic Development Council, benefits of the loan program continue to change, even as the White House and Congress continue to review options for small businesses. As of today, collateral will be required on larger loans and the program historically has a 5-month payment deferment available.
SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. Businesses may obtain information and loan applications by calling the SBA’s Customer Service Center at 1-800-659-2955 (1-800-877-8339 for the hearing impaired), or by e-mailing firstname.lastname@example.org.
Loan applications can also be downloaded at www.sba.gov/disaster. Applicants may apply online using the Electronic Loan Application (ELA) via the SBA’s secure website at https://disasterloan.sba.gov/ela. Completed applications should be returned to the local DLOC or mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
The deadline to return economic injury disaster loan applications is Dec. 21, 2020.