The administration of Lebanon Mayor Sherry Capello and lender Community First Fund announced a new forgivable loan program to provide COVID-19 recovery assistance to “mom and pop” small businesses.
On June 24, the City of Lebanon will start accepting applications for the $350,000 Lebanon City Small Business Recovery Assistance Fund. The money, expected to help 50 to 100 small or very small businesses, comes from federal Community Development Block Grant funds. The maximum loan will be $7,500.
“We acknowledge that many small businesses are struggling to stay afloat and understand the economic and emotional toll that an event like this may have on a person, business and community,” Capello said in a city-issued press release. “Not all businesses were able to take advantage of the resources made available and in order to better serve our business community, we have established this fund to assist. We are committed to a simple, low-barrier process. All cumbersome and nonessential steps have been removed.”
Read more: Lebanon City Council unveils funding plan for small businesses
Community First Fund, a community development financial institution headquartered in Lancaster, will process applications and start disbursing funds in late July.
While other COVID-19-related loan and grant programs have been available, some small businesses have received no help up to this point, Dan Betancourt, president and CEO of Community First Fund, said in a phone interview. “They’re given priority first.”
Community First Fund is also handling a separate statewide stimulus program for Lebanon County, the COVID-19 Relief Statewide Small Business Grants program.
Read More: $225M state grant program for small businesses to open up in region
Eligible small businesses must be located within the Lebanon city limits and file federal and state taxes. Loans will be forgiven pending proof that the money was used as agreed, and the business certifies that it reopened or remained open at least 90 days once COVID-19 restrictions were lifted.
“When the city found out that we were eligible for the additional CDBG-CV (Community Development Block Grant coronavirus) funding, we took immediate action so that we could offer some assistance to these businesses hit the hardest,” Capello wrote in a follow-up email. “We recognize that some of these small businesses in our community will face non-recoverable losses and would not be in a position to take on more debt. That is why we wanted the loan to be a forgivable loan,” if the above conditions are met.
The loan terms are zero percent interest and no payments for the first six months. That rises to four percent interest and a maximum three-year amortization, based on loan size, if the loan is not forgiven.
The amount of the loan is based on annual revenue: businesses with yearly revenue of $250,000 or less may apply for $2,500; those with revenue from $250,001 to $500,000 may apply for $5,000; and enterprises with revenue from $500,001 to $1 million may apply for $7,500.
Businesses with annual revenue exceeding $1 million are not eligible.
Funds should be used for working capital needs such as payroll, mortgage or rent, utilities, inventory, and other debt payments.
Preference will be given to small businesses with a storefront, including retail stores, restaurants, hair and nail salons, florists, performing arts facilities, and fitness centers, the release explained. Applications also will be ranked according to historic profitability, historically disadvantaged populations and lost revenue, among other categories.
Entrepreneurs can learn more about the loan program and submit an application (also available in Spanish) here.
The loan application window opens at 9 a.m. on Wednesday, June 24 and closes at 5 p.m. on Wednesday, July 8. According to the city’s frequently asked questions page on the program, the goal is to begin allocating the funds by July 27.
Read all of LebTown’s COVID-19 coverage here.
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