Small business owners who have suffered economic losses due to coronavirus business closures may soon get some much-needed relief. The Pennsylvania Industrial Development Authority (PIDA) is allocating up to $61,000,000 in no-to-low interest loans to provide critical working capital financing to qualifying businesses under its new Covid-19 Working Capital Access (CWCA) program.

CWCA loan applications must be made through a Certified Economic Development Organization (CEDO).  The Chester County Economic Development Council is the CEDO for Chester County. It is currently accepting applications at ccedc@ccedcpa.com.

Although some terms may be subject to change, under PIDA’s preliminary guidelines, most Pennsylvania small businesses with fewer than 100 employees will likely qualify to borrow an amount equivalent to three months of working capital expenses, or a maximum of $100,000.  Eligible costs will include capital used for operations of the business, excluding fixed assets and production machinery and equipment.

Borrowing interest rates will be set by PIDA, but are expected to be 0% for businesses other than agricultural producers.  Loans to agricultural producers will bear interest at 2%.  The loans will have maturities of 3 years, but will be amortized over 12 years, with no payments during the first year and principal and interest (if any) payments to be made during years 2 and 3, and a balloon payment due at maturity.

Security for the loans will generally be provided by a lien on business assets and guarantees by holders of 20% or more interest in the small business. Applicants will be required to provide evidence of actual incurred working capital costs and a statement of how the coronavirus has impacted their businesses.

This is very good news for small business borrowers who are able to meet PIDA’s requirements.

For more information or questions regarding this form of small business financial assistance you may call Lamb McErlane at 610-430-8000 or contact CCEDC directly at the above-referenced email.

Article by Lamb McErlane PC partner Helen J. Esbenshade. Helen concentrates her practice in public finance and local government representation, zoning and land use. She serves as an advisor to local governments, authorities, nonprofits, businesses and developers. hesbenshade@lambmcerlane.com. 610-701-4412.