Road To Recovery – Recommendations to State of Wisconsin Leaders
As the state continues to balance the public health aspect of the coronavirus outbreak with the requirement to smartly and safely reopen the Wisconsin economy, the Wisconsin Economic Development Association (WEDA) is sharing with state policymakers its Road to Recovery recommendations aimed at helping small businesses emerge from the COVID-19 economic crisis.
To avoid further economic harm and restore the Wisconsin economy, the state must take on a significant role in sustaining businesses and securing jobs, especially in sectors that were unable to take full advantage of federal coronavirus relief aid. The Road to Recovery plan offers state policymakers with a list of economic recovery recommendations that focus primarily on programs and policies that provide assistance to the “smallest of small businesses” – including sole proprietors and independent contractors, as well as rural and minority-owned businesses and certain businesses in the retail, tourism, agriculture, construction and service sectors.
The Road to Recovery recommendations were developed with input from a diverse group of WEDA members and stakeholders, including banking industry representatives, Small Business Administration (SBA) lenders; Community Development Financial Institutions; Certified Development Corporations; Regional Planning Commission; Utilities; and several economic development organizations from across the state.
Preparing Your Business For Recovery
Maximize the SBA Debt Relief Programs to leverage their 6 months of P&I payments (loans must be closed by Sept 27, 2020).
- The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.
- The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
- Work with your lenders around payment accommodations and various loan programs (video describing programs below)
- Find technical assistance to address your questions and to prepare your strategy and cash flow needs for financial institutions.
The Wisconsin Small Business Development Center participated in a recent WEDA webinar to discuss their services and how their offices located throughout Wisconsin can assist businesses in preparing their recovery strategy and for documents that will be needed for meeting with your financial institutions, if financing is sought.
Access technical assistance, as needed, to prepare your recovery strategy and loan documentation for your financial institution. Having your recovery strategy and developing your cash requirements will quicken your access to capital. As always, talk with your local bank representative to understand their thoughts in working with your business during this recovery.
SBA Micro Loan Program
The Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000. If new loans are closed before September 27, 2020, the SBA will pay 6 months of P&I.
Microloan Proceeds can be used for: a) Working capital b) Inventory or supplies c) Furniture or fixtures d) Machinery or equipment. Proceeds from an SBA microloan cannot be used to pay existing debts or to purchase real estate.
SBA 7 (a) Program
The 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses. The terms and conditions, like the guaranty percentage and loan amount, may vary by the type of loan. A summary of the 7 (a) sub programs can be found below the video link explaining the 7 (a) program and terms.
Existing Express Loan? Consider through SBA Express Lender: Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork.
SBA Express Loan: Express loan program provides loans for no more than 7 years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as the standard 7(a) loan.
List of Wisconsin SBA Express Lenders (last column)
SBA 504 Program
An SBA 504 loan is a special product that can only be offered by a Certified Development Company (CDC) in partnership with a local lender.
The 504 loan is designed to help small businesses grow and create jobs by financing fixed assets like real estate and equipment. Qualified borrowers can look forward to long terms (25 years for real estate, 10 years for equipment); low, fixed rates (see top of page for current rate) and lower down payments (10%). This program is best suited for projects from about $250,000 – $10,000,000. As part of the SBA Debt Relief Program for COVID-19, the SBA will pay 6 months of P&I on existing and new loans that are closed by September 27, 2020. Take advantage of this provision to improve both long term and short term cash flow on building and equipment projects.
Two CDC’s are based in Wisconsin and they are: WBD, Inc. and Business Lending Partners (BLP).
Wisconsin Economic Development Corporation (WEDC)
As Wisconsin’s lead economic development agency, WEDC is committed to serving the businesses, communities and people throughout the state.
The WEDC through their regional economic development directors are committed to simplifying your search for support and or financial programs that can assistance your business. The WEDC has both community and business development programs. Watch this video to learn how Wisconsin’s refundable tax credits can support your business growth.