The U.S. Small Business Administration will provide $1.9 billion in loans to nearly 23,000 Connecticut businesses through the federal Paycheck Protection Program made available during the pandemic.
“To give people that financial assistance to get back to warmer days and life back to normal” Catherine Marx, the district director for the SBA’s Connecticut District Office, said this week during several meetings with groups of small businesses to explain the benefits under the program.
In 2020, total financial assistance to the state reached $6.7 billion, but with the help of new federal relief, Connecticut is expected to soar past last year's federal COVID-19 relief for small businesses. PPP loans are completely forgivable, as long as the recipient follows certain staffing and spending guidelines.
This round of funding was rolled out for those that did not receive PPP loans in 2020. The funding is also available to previous recipients.
The Consolidated Appropriations Act, signed by former President Donald Trump in December, secured a second drawing of PPP loans for hard-hit businesses. The second draw program will allow businesses to receive a second loan through the SBA, if they have or will use all the funds from the first loan only for eligible expenses, have no more than 300 employees, and can demonstrate a loss of 25% over the previous two years. Borrowers of the loan can set a cover period for loan proceeds between eight and 24 weeks.
The new program reopened on Jan. 11 and has approved 22,669 loans to businesses in Connecticut. And over 126,000 loans from businesses in New York worth $11 billion will be provided.
“Here is the good news. There is $140 billion left in this program [nationwide] that can be dispensed until March 31,” Senator Richard Blumenthal told the Connecticut Small Business Development Center on Friday, alongside Marx.
“Many small businesses are just hanging by a thread, and they are struggling to stay in business,” he continued. “Many of them involve families that have poured their lives and hearts into these businesses.”
Loan forgiveness will be maxed to $150,000 with an interest rate of 1% for five years, if applied after June 5, 2020. Any small business and non-profit organizations are eligible for the loan unless they started business after Feb. 15, are a publicly traded company, or are a small business that operates less than seven months per year.
The new program increases eligibility for expenses of the loan including operations expenditure, property damage costs and worker protection, including personal protective equipment and adaptive improvements needed in order to follow local, state and federal law on health and safety guidelines.
The Biden administration has said smaller businesses would be prioritized after changing some policies to the PPP that would give loan access only to businesses with less than 20 employees or sole proprietors for the first two weeks, which is scheduled to end March 9, giving the larger businesses time to apply for their PPP loans.
A report released in December by a Harvard-based research institute found nearly 37% of Connecticut small businesses closed over the past year because of the pandemic — the sixth highest state in the country. Most of those businesses were a part of the food industry but two-thirds of restaurants have since bounced back and are now looking for financial relief.
The program is expected to expire March 3, or until congressional appropriations are exhausted. There are several other options available for businesses including Debt Relief on SBA(7), Economic Injury Disaster Loan (EIDL) and Shuttered Venue Operators Grant (SVOG), which has not opened yet.