State Fund Intended to Help Small Businesses Through COVID-19 Runs Out of Money; Federal Programs Available


HARRISBURG, Pa. (EYT) – It took less than five days for a program intended to help Pennsylvania Small Businesses during the shut down forced by COVID-19 to run out of money.

(Photo by Dave Cyphert of ProPoint Media.www.propointmedia.com)

According to Jill Foys, Executive Director of the Northwest Commission, the Pennsylvania Industrial Development Authority (PIDA) COVID-19 Working Capital Access Program had a fund capacity of $61 million; but, by the afternoon of Tuesday, March 31, there were 870 applications submitted totaling $75.6 million. On Friday, March 27, the applications started coming in after the program was introduced late Wednesday, March 25.

Foys said the commission was notified on the evening of Tuesday, March 31, that the program had reached its limit.

“We were informed around seven last night,” Foys said. “We began letting those we were working with know and provided information to them on additional resources like the SBA’s (Small Businesses Administration) Economic Injury Disaster Fund and the Payroll Protection Program.”

Businesses that applied for the program after the money had run out were being told the program was “oversubscribed.”

“Unfortunately, we have just been informed, in the last hour, that the program is oversubscribed and is no longer accepting applications,” an e-mail to a local business owner said.

State Representative Donna Oberlander, who represents Clarion County and parts of Armstrong County, said she isn’t surprised that the program has run out of money.

“It isn’t a surprise, given the state of this crisis, that this program would be popular,” Oberlander said. “All in all, I’m very concerned about all our Commonwealth businesses and the economic impact this has on them and the economy overall. We will continue to work at the state level, and perhaps even more at the federal (level), to address the needs of these businesses and their employees. I will continue to share information as it becomes available.”

An e-mail to Pennsylvania Governor Tom Wolf’s office from exploreClarion.com asking if the governor has any plans to work with the Commonwealth’s legislature to increase money to the fund wasn’t returned.

OTHER PROGRAMS THAT COULD HELP

(Note: Information provided below comes from a flyer put out by the SBA)

While the PIDA program is not currently available, there are some federal programs that could help business owners, as Foys mentioned, including the Economic Injury Disaster Fund and the Payroll Protection Program. Both programs were both part of the recently passed CARES Act (The Coronavirus Aid, Relief and Economic Security Act) passed by Congress last week and signed into law by President Donald Trump.

Businesses can apply for an Economic Injury Disaster Loan (EIDL) through the CARES Act.

An EIDL is a low-interest, fixed-rate loan that can provide up to $2 million in assistance for small businesses that can be used to pay for immediate expenses during an emergency. It is part of a $10 billion grant program that was established by the CARES Act meant to provide small businesses with “quick, much-needed capital.”

Businesses that are eligible for the loan include private, nonprofit organizations, small agricultural cooperatives; business, cooperatives, ESOPs and tribal business concerns with 500 or fewer employees; independent contractors; and sole proprietors whether or not self-employed.

Eligible applicants who apply for an EIDL may request up to $10,000.00 to be immediately disbursed. That amount does not need to be repaid regardless of the overall loan decision that is made for a company. According to the Federal government, a million small businesses are eligible to receive up to $10.000.00.

Businesses can apply online through the SBA portal (https://covid19relief.sba.gov/#/). Funds are distributed within three days of the receipt of the application and can be used for any allowable purpose under the EIDL program, including to provide paid sick leave, maintain payroll, and meet increases costs; make rent or mortgage payments; and repaying unmet obligations.

More information on the program can be found here.

Another program that is available in the Payroll Protection Program (PPP).

The PPP is a $350 billion loan program through the SBA for small businesses, self-employed, and gig workers to help them from going under due to the COVID-19 pandemic. If employers maintain payroll, the loans would be forgiven.

Any business concern, nonprofit organization, veteran’s organization, or Tribal business concern that employs no more than 500 employees (or the size standard in number of employees established by the Administration for the industry in which such business operates), sole proprietors, independent contractors, and self-employed individuals are eligible for the program.

Almost any bank will be an eligible lender – banks will be able to choose to be a part of it. Lending is supposed to start Friday, April 3.

Businesses will be able to get a loan for 250 percent of their average monthly payroll cost during the period of February 15, 2019, through June 30, 2019, capped at $10 million. The money can be used for employee compensation, including salaries, wages, commissions, or similar compensation; cash tips or equivalents; vacation, parental, family, medical, or sick leave; payment required for providing group health care benefits (including insurance premiums); payment of retirement benefits; and payroll taxes; payment of interest on mortgage obligation, rent, utilities, and interest on pre-existing debt obligations.

For sole proprietors or independent contractors, they can get compensation or income no greater than $100,000.00 per year.

The loan-forgiveness period isn’t unlimited and will be for an eight-week period. Currently, the covered period during which expenses can be forgiven runs from February 15, 2020, to June 30, 2020. Borrowers will be able to choose which eight weeks they want to count toward their covered period starting with the week of February 15 (which was a Saturday).

Full information on all programs to help small businesses through the SBA can be found here.

SEASONAL BUSINESS CAN GET HELP

The fact the PPP program covers the average monthly payroll costs during the period of February 15, 2019, through June 30, 2019, helps seasonal businesses to an extent.

Those businesses, including golf courses and other seasonal-types of businesses, were concerned that they weren’t going to be eligible for any money because they weren’t open for business when the pandemic started.

Teri Obenrader, who, along with her husband Rick, is part-owner of Hunter’s Station Golf Club located outside of Tionesta, was one of those worried.

“If they were basing what we were eligible to borrow on the previous three to six months of business expenses that wouldn’t be an accurate depiction of what we would need in the next three months,” Obenrader said. “I should have been opening this week, but we weren’t open three months ago or six months ago.

“The hardest part for me is I can’t just let the golf course sit there and eliminate overhead. The greens still need to be mowed, the fairway still needs to be mowed. We still need to spray for diseases and insects. Everything still needs to be maintained or we don’t have a golf course to open when we are able to open.”

Obenrader said the first few days after the programs were announced there was a lot of confusion surrounding how seasonal businesses would be handled.

“I called (Congressman Glenn) Thompson’s office, and they said that possibly we would fit under the entertainment industry, which got a pile of money from this bill and that I should look into what grants may be available through that,” Obenrader said. “They weren’t sure how much or if anything would be available through that, but they believed my business fell under the entertainment industry.”

Obenrader said she had politicians’ offices tell her she was a unique situation.

“It is not as unique as you think,” Obenrader said. “You have Cook Forest and other places like that. There are a lot of seasonal businesses in our area.”

She said the person that answered the phone at one political office even asked her why she needed to have money.

“She said that she didn’t mean to sound rude,” Obenrader said. “But she didn’t understand why we would need the money if we weren’t open yet.”

Obenrader believes one of the things that makes a seasonal business especially vulnerable at this time is the inability to recoup time lost.

“I know everybody is hurting,” Obenrader said. “Hopefully, some retail businesses may be able to recoup some of what lost when this is over because people will want to or need to buy things. But, what we lose we lose. We aren’t getting it back. If I lose a golf package with lodging, it’s not like I can book them forward to later in the year because we don’t have the capacity.”

Obenrader said she knows there is a bigger picture at work with the stay at home orders and the social distancing.

“I know there is a bigger picture, I really do,” Obenrader said. “It is frustrating because a golf course is not a hard place to social distance. Many other states have golf courses open, but I don’t think that will change (in Pennsylvania) no matter how much we complain.”


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