More than a year after last August’s historic flood, the first batch of loans from the state’s Restore Louisiana Small Business Program have finally been approved. State officials with the Office of Community Development also say more loan applications are in the pipeline.
Some $2.1 million was approved earlier this month for 18 small businesses, most of which are located in the Capital Region. They should soon receive checks, which range from $10,000 to $150,000. An additional 150 applications are currently being processed.
Though it has taken a while for the program to get up and running, state officials say the bigger challenge has been making small business owners aware that it even exists. So far, the program has had about 2,800 inquiries but fewer than 200 applications.
“That’s an issue we’ve had to try to overcome,” says Michael Chula, OCD economic development project manager. “The homeowner program was the first one to get on its feet and the small business program took longer to get created and get guidelines. When people hear Restore Louisiana, they think of homeowner assistance so we’ve had to market this a little differently.”
Of the some $2 billion in federal recovery dollars Louisiana received from Congress in late 2016, $50.1 million in Community Development Block Grant money was allocated for small business loans. The program is administered through five community development financing institutions, which operate as lenders and were selected through a state procurement process.
To make the program more attractive to needy businesses, OCD recently expanded the terms, making interest-free loans available from as little as $10,000 to as much as $150,000. No payment is required for the first six months, and if the borrower remains in good standing 20% of the loan is forgiven once 80% of the principal is repaid.
The loans can be used for working capital—rent, mortgage, utilities, non-owner employee wages and inventory, and movable equipment. Construction-related expenses are not eligible.
OCD also has extended the application deadline through Tuesday, Oct. 31, and continues to encourage flood-impacted businesses to apply through one of the participating lenders. Chula says it’s important businesses apply if they hope to take advantage of the program, which has the potential to help a lot of needy small businesses in the state.
“The eligibility verification seems big and there are a lot of things to fill in and submit,” he says. “But once you get screened, if you can make it through that initial check you’re going to get approved. That upfront eligibility check gives you a good idea if you’re going to be in a good spot moving forward.”
—Stephanie Riegel
