$100,000 Small Business Loans with 0% Interest

The COVID-19 Working Capital Access Program (CWCA), administered by the Pennsylvania Industrial Development Authority (PIDA), is making $60,000,000.00 in working capital loans available to vulnerable small businesses located within the Commonwealth of Pennsylvania that have been adversely impacted by the COVID-19 pandemic. The maximum loan amount per business is up to $100,000.00 to help the small business overcome a temporary loss of revenue.

The loan terms are three (3) years with a twelve (12) year amortization, with no payments due and payable during the first year. Principal and, if applicable, interest payments will be due monthly for years two (2) and three (3), and a balloon payment will be due and payable at the end of the third year. The interest rate is zero percent (0%), except for agricultural producers, which have a two percent (2%) interest rate fixed for the life of the loan.

For purposes of this loan, “agricultural producer” is defined as a business involved in the management and use of normal agricultural operations for the production of a farm commodity. A “farm commodity” is any Pennsylvania-grown agricultural, horticultural, aquacultural, vegetable, fruit, and floricultural product of the soil, livestock and meats, wools, hides, furs, poultry, eggs, dairy products, nuts, mushrooms, honey products, and forest products.

The application process is not open yet, but the guidelines have been drafted. All loan applications must be submitted through a local Certified Economic Development Organization (CEDO) in the county where the business is located. York County’s designated CEDO is the York County Economic Development Corporation (YCEDC), an affiliate of the York County Economic Alliance (YCEA).

To be eligible for a CWCA loan, an applicant must be a for-profit business with less than one hundred (100) full-time employees at the time of the submission of the application. Applicants need to verify that over the past three (3) months they have spent an amount equal to their loan request on direct business expenses, up to the maximum $100,000.00 loan amount. “Direct business expenses” include, but are not limited to, payroll, utilities, rent, debt payments, and inventory.

Retail and service-based businesses will need to show in their application a 1:1 match on expenses over the past six (6) months. This means the applicant will need to verify that they spent at least $200,000.00 on direct business expenses to maximize the $100,000.00 loan. A “retail/service” business for purposes of this loan is defined as a for-profit business entity that is involved in the business-to-business service, business-to-public service, mercantile, commercial, or point of sale retail sectors.

For collateral, the applicant must subordinate UCC filing on all business assets of the company behind any existing UCC filings. Personal or corporate guarantees are required for all twenty percent (20%) plus business owners.

In the meantime, there are some things that a small business can do to be prepared for the application process to open, including compiling a list of operational expenses spent over the last three (3) months (or six (6) months for retail/service businesses); preparing a summary of adverse impacts to the business, including date closed if applicable, due to the COVID-19 pandemic; listing W-9 forms completed; compiling the most recent one (1) year of filed federal tax returns or accountant financial statements (or, if the 2019 tax return has not been filed yet, then include an internal balance sheet and profits/loss statement for 2019); preparing a summary of existing business debt, current balances, and required monthly payments; and personal financial information of business owners, including personal assets and liabilities.

For assistance with evaluating your eligibility or preparing an application, please contact a member of our Business Law Group.

For updated application information, please visit the YCEA and Prepared York websites at www.yceapa.org and www.preparedyork.com.

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