Update: The launch of the bridging loan program which was to be launched on Monday April 13 has been delayed. The City’s Economic Development Department released this statement: “In anticipation of HUD approval, our staff worked quickly to build the infrastructure to support this new loan program. We are in the final stages of testing to make sure the admission process and application is efficient and effective. We will update publicly as soon as the program is ready for a full launch. “
Also: SBA’s streamlined loan application process will grant cash advances up to $ 10,000 that does not have to be repaid
Yesterday, the US Department of Housing and Urban Development (HUD) approved the city of Austin’s request to use some $ 5.7 million of already available Section 108 funds to make bridging loans for damages. economic. The City will begin accepting applications on Monday. (More on that later.)
In addition, the United States Small Business Administration (SBA) has streamlined the application process for a COVID-19 Economic Disaster (EIDL) loan – including an advance of up to $ 10,000 that does not have to be repaid.
The SBA’s EIDL program is open to a wide variety of businesses, sole proprietors, independent contractors, co-ops, employee share ownership plans (ESOPs), small tribal businesses, and non-profit organizations, including including faith-based organizations. All must have 500 or fewer employees to be eligible.
“The estimated time to complete this entire application is two hours and 10 minutes,” the SBA instructions state, “although you may not need to complete all of the games.” The SBA relies on self-certification of eligibility by applicants who must complete applications under penalty of perjury. Two local business owners, both sole proprietors, interviewed by phone today said they applied on Monday, and both said it took less than half an hour. The online application process provided an on-screen ID number when completed, but none received an email confirmation or been contacted for more information.
The city’s bridging loan applications open Monday
On March 26, 2020, Austin City Council approved the Bridge Loan Program designed to provide working capital to for-profit businesses and nonprofits. Austin’s Bulldog published extensively details about the program the same day.
However, the city could not begin accepting bridge loan applications until HUD approved the use of Section 108 funds for this purpose. HUD issued a letter Wednesday to approve the use of Section 108 funds, but only to grant bridging loans to for profit companies.
HUD letter expressly excluded the use of these funds to make loans to non-profit organizations.
Sylnovia Holt-Rabb, acting director of the city’s economic development department, said Austin’s Bulldog that online applications will be accepted starting Monday, April 13, 2020, if system testing proves things are ready. “We have to make sure the intake system is working,” she said.
“I’m still working on possible alternatives for nonprofits, but that won’t be ready by Monday,” said Holt-Rabb, “although it’s nothing more than letting us help them. non-profit organizations to complete an SBA loan application. “
Initially, bridge loan applications will only be accepted through an online process. For potential bridging loan applicants who do not have access to a computer, Holt-Rabb said procedures are still being worked out to accept paper applications. “We need to find out how to do this and keep the staff safe. We’re still figuring out that one, but we’ll find out by Monday, ”when a press release will be issued with instructions.
The city Web page about this program does not yet provide information on how to apply and it will be updated by Monday, including changing the name to what it is now called the Business and Agency Repossession Loan Austin nonprofit to become the Austin Economic Injury Bridge Loan Program.
Another good news in the letter from HUD is that the City will not have to send every bridge loan request to HUD for approval. Instead, the City will need to report quarterly on its activities under the Economic Damage Bridge Loan program.
Money bridging loan from a rotating pool
The City has $ 5.7 million set aside for bridge loans of up to $ 35,000 each. If each loan were granted at this maximum amount, it would suffice to make 163 loans.
Holt-Rabb said she didn’t have a good estimate of how many nominations could be received. “I know the need is great and we will have a better idea after the announcement.”
Loans will only be made to companies that have previously applied for an economic disaster loan from the SBA and have received confirmation of this request.
The idea is to give money to small businesses while waiting for the SBA to approve the economic disaster loan and disburse the proceeds.
Although City funds provide for a limited number of bridging loans, the rules require recipients to repay the City from the proceeds of the SBA loan. If successful, this will create a flow of funds to replenish the cash reserve for bridging loans.
Bridge loans will be for a period of 12 months or until disbursement of funds under the SBA loan, whichever occurs first. The interest rate is 3.75%.
Further details on the Economic Damage Bridge Loan Program are contained in our previous history.
Links to related documents:
Related Bulldog Coverage:
Upcoming COVID-19 Disaster Assistance for Small Businesses, March 26, 2020
Ken Martin has been covering local government and politics in the Austin area since 1981. Read more about Ken on the About the page.
E-mail [email protected].
An alphabetical list of donors who have contributed to Austin’s Bulldog since the creation of the organization in 2009 and the cumulative amount that each person has given until December 31, 2018, are indicated on the Contribution page. Work is underway to update this information until December 31, 2019.