Small businesses to get a lift from state, federal funding
BELLEFONTE — For small businesses, times are tough.
In Centre County, many businesses have been forced to close their doors — at least temporarily — during the COVID-19 crisis.
At Tuesday’s Centre County Board of Commissioners meeting, commissioner Mark Higgins gave a presentation and told the board that several state and federal assistance programs are already in place to help local small businesses that have been adversely affected by the coronavirus pandemic.
On March 19, Pennsylvania Gov. Tom Wolf said that all “non-life-sustaining” businesses must close. For several weeks now, bars and restaurants have been restricted in terms of what they can sell via takeout and curbside pickup. For many small businesses, the restrictions have resulted in layoffs and in some cases, temporary closures.
According to Higgins, employees who are fired or laid off can typically collect unemployment benefits. However, small business owners and entrepreneurs are not eligible. But a provision of the federal stimulus bill will allow the self-employed to be eligible for four months of unemployment benefits, with rules expected to be released in the next two weeks.
Additionally, unemployment contributory businesses that are temporarily closed will be granted relief from charges.
“Normally, if you have a lot of people who are unemployed, your unemployment insurance is going to go up,” Higgins said. “But soon there’s going to be forms out there where you can state ‘My staff was unemployed due to COVID-19 related issues,’ and they will not increase your unemployment insurance in the future. Obviously for a small business that’s already not doing well, this would really hurt a couple years down the line.”
There are also multiple loan and grant programs available.
“Almost all these programs are first-come, first-serve. When the money runs out, the money runs out,” Higgins said. “So you’re going to need to move quickly.”
Higgins said that the application period is open now.
“There are three major state programs and five major federal programs available to help small businesses,” Higgins noted.
The Pennsylvania Department of Community and Economic Development offers working capital loans. A total of $61 million in funding was authorized last week, the Pennsylvania Industrial Development Authority will make low and no-interest loans available to small businesses.
Additionally, the COVID-19 Working Capital Access Program will offer loans up to $100,000 for businesses with 100 or fewer employees.
“This one is also available for non-profits … certain non-profits in addition to small businesses,” Higgins noted.
Businesses must apply through their local Certified Economic Development Organizations. In the Centre Region, it’s the Moshannon Valley Economic Development Partnership in Philipsburg, or SEDA-COG — which covers an 11-county area.
Higgins said MVEDP has already processed at least six of the loans and SEDA-COG has done 19.
“The money is available, but when the $61 million runs out, it runs out,” Higgins said.
At the federal level, the Paycheck Protection Program is a $349 billion loan and loan forgiveness program being administered by the U.S. Small Business Administration and its network of approved lenders. According to Higgins, the period began in mid-February and ends on Tuesday, June 30.
“It’s a little complicated. The loan amount is based on about two-and-half times your average payroll. The interest rates will be relatively low — no more than 4 percent,” Higgins said.
The loans are typically available for businesses with 500 or fewer employees, including the self-employed and sole-proprietors.
Loans are based on a formula that is essentially two-and-a-half times a business’ average monthly payroll, Higgins said. The loans can be used for payroll costs, rent, mortgage interest and utilities. Importantly, if properly documented, businesses can be eligible for loan forgiveness after eight weeks.
For any portion of the loan that is not forgiven after the eight-week period, all payments would be deferred for six months, and possibly up to a year, Higgins said.
Businesses that have already laid off employees would have options for some loan forgiveness by hiring them back.
Details on lenders and processes for the Paycheck Protection Program are expected to be released by SBA soon, Higgins said.
Finally, there’s the Federal Reserve’s Main Street Business Lending Program, which will use banks and credit unions to funnel financing to small and medium businesses to help them make payroll and stay afloat in the coming months.
The program will provide $454 billion in direct funding and will leverage as much as $4 trillion from local banks and credit unions, he added.
Rules and funding are expected to be available later this month.
In closing, Higgins showed an image of four downtowns located in the Centre Region.
“This is a picture of four of our major downtowns in Centre County,” Higgins noted. “They’re full of small businesses. If we don’t work together and cooperate to save our small businesses, many of them will be gone in a couple of months.”