Navigating Access to Capital Resources During a Crisis
On the first day of the Small Business Bootcamp series, panelists, Manuel Flores, Marcus Yancey, and Merly Thomas, shared the many capital resources available to Chicago business owners. The panel offered in-depth descriptions of the different payment programs and loans as well as advice on how to identify which might be best for your business.
Manuel Flores is the president and CEO of SomerCor, a nonprofit small business lender certified by Small Business Administration (SBA) specializing in SBA 504 loans. He began the session identifying many large loans and grants available nationwide:
SBA Economic Injury Disaster Loans
The application process is done directly through SBA. It’s simple and streamlined in order to allow quick review. Given the volume of requests, it’s best to do it online. You should receive a response in 20-40 days.
- EIDL also offers grants up to $10,000 for anyone applying.
- You can receive this grant money even if you’re turned down for the loan.
- SBA does not require money back.
EIDL offers loans up to $2 million in assistance, which can be used to pay bills that can’t be paid because of the disaster’s impact.
They’ll be evaluating COVID-19’s impact on your business and how it impeded your business from operating through a review of things like your credit history and location of business at the time of disaster.
Interest rate is 3.75% for small business, 2.75% for non-profits (including faith-based org), repayments up to max 30 yrs.
- You must be a small business, which is often defined as having fewer than 500 employees but you can look up sba.gov to see if you qualify.
- EIDL is only for businesses that have been operating since Jan 1, 2020.
- If you can’t provide collateral, this is not a reason for denial.
- If you own multiple businesses, you should be able to apply for each company
Paycheck Protection Program
This loan program provides 100% loan guarantees for loans up to $10 million per small business with an interest rate of 1%. It was created as an incentive for small businesses to keep workers on payroll.
SBA will forgive loans if all employees are kept on payroll for 8 weeks and money is used for payroll, rent, mortgage interests, or utilities (75% of loan must be going into payroll).
- You will owe money when the loan is due if you use the loan amount for anything other than payroll, rent, mortgage interests, or utilities (with specific requirements on time limit and percentage of loan used on other costs).
- It is important to maintain receipts so that you can quickly demonstrate how funds were used.
- Consult with your local lender/banking partner to see if they’re participating in the PPP loan.
- Also good to meet with your accountant/ business attorney. It is the responsibility of the borrower to ensure all information is accurate. You don’t want problems down the road when you submit certification.
Express Bridge Loan Pilot Program
- This program offers up to $25,000, allowing you to get money as you wait for EIDL or PPP dollars.
- No collateral but there are fees
Panelist Marcus Yancey, Economic Development Lender and Special Projects Officer of Local Initiatives Support Corp Chicago (LISC) shared how his organization and the City of Chicago is working to support local business owners.
Local Initiatives Support Corp Chicago (LISC) Rapid Relief and Resiliency Fund
The LISC Fund has a goal of raising more than $100 million to provide grants, funds, and flexible loan capital up to $10,000 to businesses facing immediate financial pressure due to COVID-19 in an effort to support quick turnaround.
The grant money can cover rent, utilities, payroll, outstanding debt, upgrades for tech infrastructure (for remote delivery of services), emergency cash assistance for clients most in need, and other immediate operational assistance.
LISC will also provide tech assistance: #PayItForwardLive by tagging your favorite businesses on Twitter, and Verizon will continue to donate to the fund.
Chicago Small Business Resiliency Fund
The $100 million fund was established by the City of Chicago to complement the PPP that SBA launched.
- You must have a minimum decrease of 25% in revenue due to pandemic, gross revenue of less than $3 million in 2019, less than 50 employees, 50% of employees residing in Chicago, a physical city address or valid City of Chicago business license, no pre-existing tax liens or legal judgments and you must have been in operation for at least a year.
- Multiple business owners may not apply for the same funds.
- You may request up to $50,000. Loans are determined based on average monthly revenues three months prior to COVID-19.
- Proceeds required to be used for working capital purposes only, at least 50% of proceeds applied to payroll, retain at least 50% of the workforce pre-COVID-19 for 6 months.
- There is an opportunity to get on a payment plan and move forward with a loan in the event the applicant or business has existing city debt.
- It is important to look at future projections in order to make sure you’ll be able to pay back the loans with future circumstances in mind.
Merly Thomas is the Director of the Small Business Development Center within the Industrial Council of Nearwest Chicago (ICNC). She first applauded the many ways she’s seen entrepreneurs forgo their normal business goals to act as a source of relief for one another. Next, she shared what statewide resources are available for Illinois business owners.
Other statewide resources
The Industrial Council of Nearwest Chicago (ICNC) has a COVID-19 resources page which contains funding opportunities, workforce, and employee resources, and is updated daily.
Department of Commerce and Economic Opportunity (DCEO)
- Illinois Small Business Emergency Loan Fund offers up to $50,000 for businesses with less than 50 employees and less than $3 M in 2019 revenue.
- Downstate Small Business Stabilization Program
Illinois State Treasurer’s office
The speakers highlighted the three phases of disaster situations similar to the one we’re in, relief, reboot, and transform. We are only in the relief phase, so it is important to remain both prepared and hopeful for our next steps together.
The Polsky Center’s virtual Small Business Bootcamp was made possible through a partnership with the Rustandy Center for Social Sector Innovation and the Office of Civic Engagement at the University of Chicago, on behalf of a larger coalition of University groups and partners.
// We will be recapping the Bootcamp all week, but all the sessions were recorded and can be found online, here.
Interested in seeking continued coaching and support? Apply for the Small Business Circle. Applications are due Thursday, April 28 at 5:00 p.m. CST. Learn more and apply. >>