COVID-19 Working Capital Access Program

UPDATE – 8:30am – April 1, 2020 – The Pennsylvania Department ofCommunity and Economic Development (DCED) informed its local economicdevelopment partners at 7:15pm on March 31, 2020 that due to the890 applications submitted statewide with $75.6 million in applicationrequests, DCED will no longer be accepting new applications for the COVID-19program.  As the final decision on loan application approvals will be madeby DCED in Harrisburg, we cannot provide an update on the status of loanapplications at this time.  We are strongly encouraging businesses prepareapplication materials, but hold onto them, in the event the state reopens thisor any related programming.  We are also encouraging all businesses to speakwith their financial institutions about additional support and relief as wellas to keep aware of all the new and updated COVID-19 support from the U.S.Small Business Administration - https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources 

PROGRAM DETAILS*:

*Subject to change as implementation evolves per PA DCED

Access point for this program: Montgomery County companies will work with the Montgomery County Commerce Department and our Certified Economic Development Organization partners in southeastern Pennsylvania.

Program Guidelines: Please read the Program Guidelines thoroughly before beginning an application.

Eligible Businesses: Any for-profit businesses located in PA and with 100 or fewer employees worldwide may qualify for disaster relief loans.  Applications will be submitted by a designated CEDO on behalf of your business and the Montgomery County Commerce Department.

Loan Amount: The lesser of 3 months of working capital not to exceed a loan amount of $100,000

Interest Rate: 0% for all business types except Agriculture Producers

Amortization: 12 years

Term: 3 years

Repayment: No payment in first 12 months, amortized payments monthly for the following 24 months, one balloon payment for the remaining balance in the 37th month.

Collateral: Blanket lien on all current business assets and any acquired in the future in first available lien position.

Guarantors: All owners (individual or other business entities) owning 20% or more of applicant business must guarantee the loan.

credit criteria for approval (as evaluated by PIDA staff in Harrisburg) may include:

  • At least breakeven performance in the prior year
  • Acceptable personal credit history of the guarantors
  • Historical cash flow adequate to pay obligations
  • 1:1 debt service coverage ratio

Eligible Uses of Loan Proceeds:

  • 100% of working capital costs incurred in the last 3 months for most businesses (including debt service, excluding fixed assets).    Businesses in the retail/service sector can include working capital costs that were incurred in the last 6 months, however only 50% of those costs will be eligible which calculates to 3 months of business expenses
  • NOTE:  This program will require you to document the last three (3) months (or six (6) months for retail & service companies) of working capital expenditures

Ineligible Activities:

  • Providing funds, directly or indirectly, for payment whether as loan repayment, dividend distribution, return of capital, loans, or otherwise to owners, partners or shareholders of the business enterprise, except as ordinary compensation for services rendered.
  • Finance a project located outside the geographic boundaries of this Commonwealth.
  • “Future” or “projected” costs are not eligible

Available Funding:

There is $61 million in total available across the Commonwealth as of March 23, 2020.  Final determination of application approval will be made by PIDA Staff in Harrisburg; submission of an application does not guarantee funding.

Note:  Funds are expected to be in high demand.  It is very likely demand for loan funds will outstrip supply.

Application Items – all documents must be submitted and completed in full before an application will move forward:

1 - PIDA CWRA Narrative Form

2 - Exhibit A - Company Profile Sheet

3 - Signed W-9 form for any individual or entity serving as a Borrower or Co-Borrower
- Fillable form with scanned signature – must be signed and submitted via  email or,
- Fillable form with electronic signature

4 - Exhibit B - signed Certification Sheet for the applicant company(s) and each principal or entity with 20% or more ownership
- Fillable form with scanned signature – must be signed and submitted via  email or,
- Fillable form with electronic signature

5 - Individual credit report less than six months old for any individual with 20% or more ownership in the operating entity and if applicable, the project real estate being financed.

6 - For businesses with an operating history of one year or more, if available, the most recent year end accountant prepared financial statements or the most recent filed tax return, OR, for businesses with less than a year operating history, the most recent available management prepared financial statements.

7 - Exhibit C - Debt Schedule - outlining all existing debts of the operating entity. This form is not required if accountant prepared financials are provided and include a detailed debt schedule

8 - Exhibit D - Cash Flow Analysis - demonstrating the debt service coverage ratio for the loan request

9 - Exhibit E - Signed and Dated Personal Financial Statement - no less than 12 months old for all individuals with 20% or greater ownership in the eligible business enterprise
- Fillable form with scanned signature – must be signed and submitted via  email or,
- Fillable form with electronic signature option

10 - The most recent year of financial statements for any entity other than an individual with 20% or more ownership in the eligible business enterprise.

UPDATE – 8:30am – April 1, 2020 – The Pennsylvania Department of Community and Economic Development (DCED) informed its local economic development partners at 7:15pm on March 31, 2020 that due to the 890 applications submitted statewide with $75.6 million in application requests, DCED will no longer be accepting new applications for the COVID-19 program.  As the final decision on loan application approvals will be made by DCED in Harrisburg, we cannot provide an update on the status of loan applications at this time.  We are strongly encouraging businesses prepare application materials, but hold onto them, in the event the state reopens this or any related programming.  We are also encouraging all businesses to speak with their financial institutions about additional support and relief as well as to keep aware of all the new and updated COVID-19 support from the U.S. Small Business Administration - https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources