On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was singed into law by President Trump. The new CARES Act includes funding for small businesses by way of loans that may be converted to grants if certain conditions are met. Details on Pennsylvania’s small business loan program are now finalized. Below is a summary of the Federal programs and Pennsylvania program and includes links to resources for additional details.
CARES Act: Paycheck Protection Program (PPP) – Forgivable Loans for Small Businesses
Under the CARES act, small businesses (500 or fewer employees) may be eligible for government-backed loans for payroll and other short-term operating expenses.
Borrowers that maintain certain employment and wage figures through June 30, 2020, may be entitled to significant or total tax-free loan forgiveness.
The Administration soon will release more details and list of lenders offering loans under this program.
See the link below to the US Chamber of Commerce guide which provides more details.
Below is some additional information on this new program:
SBA Economic Injury Disaster Loans (EIDL)
Low-interest loans are available for working capital to small businesses and non-profit organizations suffering substantial economic injury as result of the Coronavirus (COVID-19).
Loans are offer up to $2 million in assistance and can provide vital economic support. The interest rate is 3.75% for small businesses and 2.75% for non-profits.
This loan is not as attractive as the PPP discussed above, but could provide access to credit in certain situations.
Below is the link to the SBA website for instructions to apply.
Pennsylvania COVID-19 Working Capital Access Program (CWCA)
New loans available to small businesses in PA impacted by Coronavirus (COVID-19). The CWCA is administered by the Pennsylvania Industrial Development Authority (PIDA).
Applications are submitted through a Certified Economic Development Organization (CEDO) for county in which the business is located and administered by PIDA
Delaware County– http://www.delcopa.org/covid-cwca.php
Chester County– https://ccedcpa.com/cwca/
Bucks County– https://bcedc.com/news-events/covid-19-info
Berks County– https://greaterreading.org/cwca/
Montgomery County– Applications for the lower half of Montgomery County will go through Bucks County’s EDC and the upper half of Montgomery County will go through Berks County’s EDC.
Some details include:
Small business is defined as those with fewer than 100 full-time employees.
Costs eligible for funds are working capital needed for operations excluding fixed assets and production equipment/machinery.
Loan amounts are capped at $100,000. No job creation/retention requirements. Interest rate is 0% with no payment for the first 12 months. Repayment to made in 3 years.
Loans are secured by blanket lien on all business assets currently owned or acquired in the future. Loan guarantees required for any individual or entity with 20% or greater ownership interest in the business.
Debt service coverage ratio should be at least 1:1 or better
Links below are to PA DCED website for additional details and the program guideline: