Pennsylvania Creates Small Business Assistance Loan Program

On March 25, 2020, Pennsylvania Governor Tom Wolf announced that the State has created a $60 million loan program, the COVID-19 Working Capital Access (CWCA) Program, to assist small businesses that have been negatively affected by the closures and restrictions mandated the novel coronavirus prevention measures.

The Commonwealth Financing Authority’s Small Business First Fund recently authorized the transfer of $40 million for the new program created under the Pennsylvania Industrial Development Authority’s (PIDA). Funds are expected to be available to businesses this week.

The CWCA Program will offer loans up to $100,000 to for-profit businesses with fewer than 100 full-time employees. These low (or no) interest loans are being provided to small businesses to help keep them afloat during these difficult times.

Eligible costs include working capital, which for purposes of this program is considered capital used by a small business for operations, excluding fixed assets and production machinery and equipment. Any eligible working capital cost incurred by the eligible business enterprise three months prior to submission of the loan application will count as an eligible cost toward either the loan amount or, if applicable, the matching investment requirement.

Retail/service enterprises are able to incur eligible working capital costs up to six months prior to submission of the loan application. For the purposes of this program, a retail or service enterprise 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.

Terms and Application

The interest rate for the program is 0% except for agricultural producers,* in which case the interest rate is 2% fixed for the life of the loan.

The loan is secured by a blanket lien on all business assets currently owned or acquired in the future at the highest lien position available. Further, the loan shall be guaranteed by any individual or entity with a 20% or greater ownership interest in the eligible business enterprise.

Loan terms are three years with a 12-year amortization. No payments will be due and payable during the first year. Principal and interest (if applicable) payments will be due monthly for years two and three. A balloon payment will be due and payable at the end of the third year.

The loan must be applied for through a Certified Economic Development Organization (CEDO) in the county in which the business is located. The CEDO will work with you to determine if the CWCA loan program can assist with financing the needs of your business and will discuss with you in detail how the application process works. Click here to download complete program and application guidelines.

*An agricultural producer is defined as a business involved in the management and use of a normal agricultural operation 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. 

Additional information and assistance for Pennsylvania businesses can be found on the DCED Resources website. Questions about the program can be directed to 717.783.5046.

Related Posts:

PA CARE Package to Provide Consumer Loan Relief

Small Business Loans Available through the CARES Act

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Grossman Yanak & Ford LLP, a certified public accounting and consulting firm, was founded in 1990. The firm is led by seven partners and serves clients in Pittsburgh and the surrounding region.

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