City deploys bridging loan program to help businesses affected by Covid-19
Thursday 23 April 2020 by Chad Swiatecki
Small businesses now have another option for financial assistance amid the Covid-19 pandemic, in the form of a new city loan program that will provide up to $ 35,000 per beneficiary.
On Wednesday, the city announced the Austin Economic Injury Bridge Loan Program, which has total funding of $ 6 million and is intended to provide quick relief to businesses waiting for or failing to fund the US Small Business Administration. were unsuccessful in their request.
Veronica Briseño, director of the Department of Economic Development, said the program can fund loans to 170 companies if each beneficiary accepts the maximum amount. She said it is possible but undecided at this point whether more funds will be allocated to provide additional loans once the first round is over.
The loans are available to small businesses headquartered in one of the 10 city council districts that can demonstrate economic loss from the pandemic. Recipients must repay the city in 12 months at an interest rate of 3.75%.
The department will have staff available to serve as a case manager for applicants and provide the necessary assistance, hoping to avoid the frustrations many businesses have experienced when applying for federal loans under the Protection Program. paychecks.
“We expect the demand for these loans to be high, and because of this, we have been working hard to develop the appropriate infrastructure,” she said. “We are closely monitoring what happened at other levels of government when a program like this was released, and we took our time to make sure our website is set up to handle the load as well as that staff be deployed to assist applicants. We also recognize that there may be a need to meet again and consider how we might fund this program with additional dollars at some point. “
The loan program is in addition to other movements by the city in recent weeks, including allocate $ 15 million which will be used to provide housing and food assistance or direct cash payments to vulnerable residents.
Jon Hockenyos, an economist who helped provide analysis of the effects of the pandemic on the city’s finances and the local economy, said providing bridge financing to keep struggling businesses open is the first step in stabilizing businesses. He said the next step will be the creation of a plan to open more businesses currently closed for limited commercial activity while protecting them from a public health perspective.
This framework means that businesses that require large numbers of customers gathered in one place are likely to be the last to reopen. Over the past week, Gov. Greg Abbott and city and county leaders have indicated that the first reopening of limited types of businesses will take place in early May.
“If you are a ball bearing factory, you have to think about how I protect my workers and in that process change my business processes, and there are people who do,” Hockenyos said. “What’s going to happen next will be the businesses that serve people one by one, like going for a haircut or having their teeth cleaned or seeing your accountant – we’ll figure out how to do that one-on-one interaction. head safe for both parties, ”he said.
“Where it gets complicated is with a bar or a restaurant or a movie theater, a concert or a hotel where you are open to the public and where there are a lot of people to think about, because you are going to have to do all the other things while thinking about how to do it with reduced capacities.
Hockenyos said bridging loans will likely need to be supplemented with improved unemployment programs for workers, in an effort to cover some basic investment costs to prevent businesses from shutting down permanently.
“There aren’t enough resources to close the gap until we’re open again. It’s about keeping the business itself alive rather than preserving the livelihoods of everyone who works in the business, but the hope is that you bring everyone back at some point.
Photo made available via a Creative Commons license.
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