Read below for information, updates on emerging financial programs
As the COVID-19 emergency has unfolded, we have seen a number of loan programs emerge that are designed to help businesses survive and pay employees. Some programs include the potential for partial or full forgiveness, and all have favorable terms. The landscape for these programs is shifting rapidly, and application processes and guidelines often cannot keep up with official announcements. Here are some of the programs and what we know about them:
• Paycheck Protection Program Loans (PPP): This attractive new federal program was created as part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act recently passed by Congress. The intent is to cover payroll and some other operating costs during the emergency. If the loan is used for payroll purposes as outlined in the guidelines, it may be forgiven. Although this program was intended to start on April 3, there are indications banks may need to analyze updated guidelines before accepting applications. We encourage businesses to monitor SBA’s website and news from your bank or credit union as this program develops.
• SBA Economic Injury Disaster Loans (EIDL): This was the first emergency loan program publicized by the U.S. Small Business Administration (SBA), and it carries highly advantaged interest rates and terms. The program also contains a provision for a rapid advance of $10,000 that may be forgivable. It appears that SBA is still accepting applications for this program, and we have heard that after a rocky start the application process is working more smoothly. Learn more about the program and how to apply at the SBA website.
• Minnesota DEED Small Business Loan Guarantee Program: This program was recently created by the Minnesota Legislature. Loans would be provided through traditional lenders, and the State of Minnesota will provide up to an 80 percent guarantee to the lender. The initial allocation of $10 million to this program will fund a limited number of loans, and at present only a limited number of lenders have enrolled to offer these loans. The Minnesota Department of Employment and Economic Development website contains more information on lenders and eligibility.
• Minnesota DEED Small Business Emergency Loans: The Initiative Foundation is one of 19 nonprofit lenders for this program intended to provide partially forgivable loans to restaurants, bars, hair salons and other public accommodations impacted by Minnesota Executive Orders 20-04 and 20-08. Loans are intended to cover up to three months of operating expenses, and can range from $2,500 to $35,000. The program was funded by the Legislature for $30 million. At this time it appears that the number of eligible applicants exceeds the available dollars, but applications are still being accepted in case the program receives more funding. Details on eligibility and how to apply can be found at the Minnesota Department of Employment and Economic Development website.
We also encourage you to check out these COVID-19 small business resource pages:
• Minnesota DEED COVID-19 relief information page for businesses and employers.
• U.S. Chamber of Commerce COVID-19 information page
Finally, the Initiative Foundation will continue to seek other resources to help our small business community, and will send a follow-up email if developments merit. Please also check our COVID-19 landing page for further information.