State College Redevelopment Authority has launched a second round of microloans of up to $20,000 at 0% interest for businesses located within the borough boundaries.
Meant to act as bridge loans so borough businesses can continue to operate during the COVID-19 pandemic, the loans have a three-year term, according to a release from the borough. Principal payments do not begin until September.
Local businesses that received a loan from the program’s first round, which was launched in September, are eligible to apply again.
The loans can be used for working capital, including rent, payroll, utilities, inventory and payable accounts.
The application is available online.
Non-franchise businesses in State College that do not have any additional locations outside Centre County can apply.
“The goal of the program is to assist small, locally-owned businesses, not regional or national chains,” a statement from the borough said.
Businesses must agree to follow all required federal, state and local guidelines for COVID-19 safety and prevention. They also must report on the use of the loan funds within six months of issuance, through an online tool provided by the Redevelopment Authority.
If after receiving a loan a business closes its current location and relocates outside the borough, the outstanding loan balance will be due in full at the time of closure.
Like similar COVID-19 relief programs, applicants are required to have a credit score of at least 650.
“While this loan program seeks to help as many businesses as possible, we need to ensure that businesses who receive this aid are truly in need of support and were viable businesses prior to the COVID-19 pandemic,” the borough statement said.
Applicants also are required to provide evidence of the extent of revenue and income loss. Because many businesses experience a seasonal ebb and flow, additional documentation is required “to obtain an accurate picture of what each business typically earns in order to compare it to the current business climate during the COVID-19 pandemic.”
The microloan program will prioritize businesses that demonstrate the largest percentage of revenue and income loss since March 6, 2020, the date Gov. Tom Wolf issued an emergency declaration.
Businesses that did not receive funds from the federal Paycheck Protection Program also will be given priority.
“However, the Borough will do its best to quickly provide support to as many small businesses as possible,” the statement said.