U.S. loans available to small businesses

State also has $7M to help in struggle

Small businesses across Arkansas can now apply for low-interest federal loans to help them survive losses driven by the coronavirus pandemic.

Gov. Asa Hutchinson said Friday that the state has been designated an economic disaster area, opening the way for small businesses to receive funding from the U.S. Small Business Administration.

Any of the 249,000 small businesses operating in Arkansas that have suffered hardship caused by the virus can receive up to $2 million in loans for working capital.

“This is a loan program that is available to small businesses across Arkansas,” said Edward Haddock, state director of the SBA.

The federal program is the most substantial publicfunding source available to help small businesses in all sectors. President Donald Trump has pledged to provide up to $50 billion to support small businesses, which are defined as companies with fewer than 500 employees.

Applications could take time to process given the expected volume of requests,

and Haddock noted that it would probably be several weeks before businesses actually receive money.

“This isn’t going to be the quickest way to access capital,” Haddock said, recommending that businesses that need financial support now work with private lenders. “That’s the best option for those who need immediate capital.”

Also Friday, Attorney General Leslie Rutledge announced that her office will contribute $3 million to fund small-business loans in Arkansas. That contribution will supplement $4 million the governor made available through his quick action fund this week.

“We have a lot of families that are hurting and a lot of businesses that are not able to take care of their workers,” Rutledge said in announcing her office’s contribution.

“That is going to help our small businesses and families across the state to get them the money they need now to take care of their employees, and for their employees to take care of their families,” she said.

The Arkansas Economic Development Commission already is fielding applications for the $7 million available through the program, said Clint O’Neal, executive vice president of the commission.

“It was important to have a program in place where we could move very quickly,” he said.

Financing is available for companies that “are in the supply chain of essential goods and services” — with priority given to the health care, food manufacturing and logistics sectors, O’Neal said.

The fund will provide up to $250,000 in zero-interest loans to qualifying businesses, and there is an option to defer repayment for six months.

“This is an effort to keep the supply chain moving and to help Arkansas companies,” O’Neal said, noting that the agency is going to short-circuit a formal application process and work closely with companies seeking support. “We wanted to engage directly with the companies to move this along,” he added.

The state agency also is working with the governor to convert $12 million in Community Development Block Grants to provide no-interest bridge loans to support small businesses with economic troubles brought on by the virus. Redirecting the money requires federal approval.

The governor has proposed using the $12 million to provide direct loans to companies and grants to clinics, hospitals and other nonprofits in rural Arkansas.

Requests for SBA funding can be submitted now through the agency’s website or by contacting the local office.

Loans are for working capital, which includes fixed debts, payroll, accounts payable and other bills that can’t be paid because of losses caused by the virus. Loans are not available to cover lost sales.

There is no way to predict just how much support small businesses will ultimately need to survive the crisis, Haddock said.

“What we know right now is that this will affect everyone very broadly and very significantly,” he said. “The need is going to grow exponentially as we look at the number of days that businesses will have to close.”

Efforts to contain the virus have led to the forced closing of bars, restaurants and other service businesses that are traditionally challenged by thin operating margins.

“This will have a compounding effect on an already challenging small-business environment,” Haddock said.

Judging by responses over the past few days, there is tremendous need for support. Haddock noted that his office is receiving about 100 calls a day from businesses.

O’Neal said the state Economic Development Commission’s website has received more than 9,000 views since the state loan programs were announced Wednesday. A typical day would bring about 500 views.