Indiana County economic development leaders are seeking up to $1.23 million of federal Coronavirus Aid, Relief and Economic Security (CARES) Act funds for a low-interest loan program to help small businesses reopen following the coronavirus shutdown.
The money would be awarded through a revolving loan fund much like more than $1 million the county has offered for capital projects by Indiana County manufacturers and other businesses for the past 30 years.
The U.S. Department of Commerce, through the Economic Development Administration (EDA), has invited the county to apply for CARES Act cash due to the county’s track record of managing past revolving loan fund money, according to a letter from a regional director at the EDA.
The Indiana County board of commissioners on Wednesday authorized the Indiana County Office of Planning and Development to formally apply for the award. At the same time, the commissioners agreed to broaden the qualifications for businesses to take advantage of the new money and the county’s existing loan fund.
“We’re amending the fund to provide for exceptions for the one-year period due to the COVID-19 pandemic,” said Executive Director Byron Stauffer Jr. “Under these revised guidelines, we’re going to try to lower the interest rates, modify our leveraging requirements, modify the collateral requirements. All the things we do, we’re going to change to make it friendlier to businesses in these circumstances.”
The changes in the Revolving Loan Fund make it different from the government’s COVID-19 Payroll Protection Program. Companies can qualify for up to three months of operational expenses rather than eight weeks as provided by PPP, Stauffer said.
The loans would be capped at $50,000 that companies could use for payroll, benefits, utilities, rent and inventory, for example.
“We’re also going to modify the eligible industries, because typically we don’t do restaurants, we don’t do retail service-type businesses — so we’re going to try to include them in this one-year amendment,” Stauffer said. “Somebody that got a PPP and needs to reopen, this could help. Somebody that didn’t get a PPP, that fell through the cracks, that wants to reopen — this could help. That’s who we’re going to try to target, the people that need it the most.”
Stauffer said the program wouldn’t be an aggressive competitor to local banks that want to make COVID recovery loans, but the planning office may work in tandem with them to stretch the available cash.
“We’re sensitive to that. We’ll work with lenders and may be do shared participation deals … but we’re trying to deploy capital where it might be harder for some businesses to reopen, and work with SBDC (Small Business Development Center) for projections for businesses that may need to change the way they do things,” Stauffer said.
Within the county, he said planning office would consider applications on a first-come, first-served basis — with consideration of demonstration of need, but with the hope of wide geographic distribution.
The county received startup funding of $250,000 in 1990 for development of the Indiana County Commerce Park, then won an additional $1 million in 1994 to aid in the takeover of the Season-All window and door manufacturing plant by company executive Wayne Gorell.
Over the past 30 years, Stauffer said, the $1.25 million has been repaid, loaned out and repaid over and over to the benefit of more than 70 companies and projects in Indiana County.
That success, he said, makes him confident that county merits the award of CARES Act cash now being offered.
“EDA is inviting certain current recipients of existing EDA-funded Revolving Loan Fund (RLF) awards to apply for a supplemental RLF award to help respond to the unusual and compelling urgency of the coronavirus pandemic,” Director Linda Cruz-Carnall wrote in the letter. “EDA has determined that these RLF partners, by virtue of their longstanding and substantial investment in making credit available to small businesses, possess unique abilities to support the CARES Act Recovery Assistance initiative and that it is therefore in the public interest to make awards to these organizations on a non-competitive basis.”
For bookkeeping purposes, the planning office would account for the CARES Act award separately — “it would be a third fund within the Revolving Loan Fund program. Every time we get new money, we track them as separate dollars, so we have a fund within a fund,” Stauffer said.
For loan recipients, all the county’s loan fund money would be seamlessly made available for the purposes of COVID-19 recovery.
The county faces a June 7 deadline to file application papers with the Economic Development Administration. EDA, in the letter, promises to make a decision within 30 days.
“Approval is contingent upon factors including, but not limited to, the availability of funds, your past performance and compliance with federal awards, and the responsiveness of your application to the criteria of this letter invitation,” Cruz-Carnall wrote.
“I think that we’ll demonstrate that there’s the need for it, so I’d be surprised if it’s anything less than” $1.23 million, Stauffer said. “We’re going to market the program and try to get as much money out there as quickly as we can. By matching these guidelines with our existing program, we could get almost $2 million on the street in a matter of months.”