Legacy offers forgivable loans to businesses affected by the COVID pandemic
As the country nears a sense of normalcy, small businesses – especially minority-owned businesses – are still struggling to recover from the financial crisis of the pandemic.
Closures during the first days of the pandemic and the pace of public health orders have taken their toll on the bottom line of mom-and-pop businesses. Even as businesses open up, mask restrictions loosen and more people are vaccinated, cash registers don’t ring as much as some people are still worried about venturing into crowded stores.
But financial aid is available.
Legacy Redevelopment Corp, a community development financial institution, received a $ 1 million grant from the city of Milwaukee to provide forgivable loans to small for-profit businesses affected by the pandemic.
“There are still small businesses trying to stay afloat,” said Terese Caro, president and CEO of Legacy, which specializes in urban small business loans. “They are not quite where they were before the start of 2020. This loan was put in place to keep trying to help small businesses.”
Business owners can apply for loans of up to $ 20,000 which can be used for working capital, including the purchase of personal protective equipment like plexiglass shielding so businesses can operate smoothly. security. Loans can also be used for payroll, rent, mortgage, inventory, or equipment. Homeowners can apply for loans even if they have received other financial assistance from the state and local government.
The loans are repayable after six months if the companies meet certain criteria. Owners should show how the money was used and show whether the staff remained the same at the time of the loan, or whether the owners created new positions or rehired workers.
“It’s creation or retention,” Caro said. “So either you keep who you have or you bring in new people. After these six months, if you can demonstrate it, the loan is canceled.
Although businesses are eager to reopen, finding employees has been the biggest challenge. Some people remain reluctant to return to work for fear of catching the coronavirus, while higher unemployment benefits make it harder for companies to bring workers back.
“Some people do better staying home than they were at work,” Caro said. “So some people are not ready to re-enter the labor market. It has been a problem.
This loan, she said, can help businesses meet staffing needs as more stores open.
“These companies have performed half or three quarters of what they are used to managing for a year and a half now,” she said. “It’s a lot to catch up on. So you’re still behind the eight ball trying to get in front of some of that stuff. “
The grant money is part of the federal CARES act of last year and a byproduct of the spinoff from the first round of the payroll protection program.
During the initial rollout, owners of small businesses were overlooked while larger ones took full advantage of the program, quickly depleting money. The outcry over the way the funds were distributed forced many to return the money.
Related:Find Wisconsin Business Paycheck Protection Program Loans
Related:Money for emergency small business loans has dried up, Small Business Association no longer accepts applications
In addition, small businesses were not served by large banks due to greater incentives to make larger loans, Caro added. In response, the Small Business Association and the US Treasury Department have set aside money for organizations like his to help small businesses take advantage of federal dollars.
Legacy hopes to serve at least 35 to 40 small businesses through this loan program.
“As PPP funds come to an end, for the most part, there are still people looking for financial support… [and] who needs it, ”Caro said.
Deshea Agee, of the King Drive No.8 Historic Business Improvement District, said any financial support is helpful as the pandemic has greatly affected small businesses in her district.
Many have cut hours and staff to stay afloat while the pandemic has hampered expansion plans for others. Unfortunately, he noted, the neighborhood has seen two businesses close, Center City Wellness and Creative By Design, an interior design company. Other businesses are running at least 80 percent.
And while businesses in her district have been resilient and creative in staying open and serving customers, any financial relief is welcome. There are several pots of money, including up to $ 50,000 in financial aid from the Greater Milwaukee Foundation to help business owners. Entrepreneurs, Agee said, can take advantage of these different resources to grow, maintain and even reopen their businesses.
“The way the funding can be used, I think, is very broad. It is the working capital; it is equipment; these are improvements, ”he said. “So I think the level of funding gives businesses confidence that they can weather the storm they’re in right now so they can get out of it.”
While some businesses may be reluctant to take on additional debt, Caro said the loan parameters are not so prohibitive if the business cannot meet forgiveness requirements. The companies have five years to repay the loan at 6% interest.
“As businesses reopen and revenues roll in, this money is like extra support to make sure things are sustainable for businesses,” she said. “I don’t think it would be a difficult hurdle for the borrower to meet the requirements of this loan.”
For more information, contact Terese Caro at 414-343-3091 or [email protected] or www.lrcmke.com.