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REGIONAL— The phones are ringing almost all the time at the Entrepreneur Fund in Eveleth these days. The nonprofit provides business development services and lending to commercial ventures in …
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REGIONAL— The phones are ringing almost all the time at the Entrepreneur Fund in Eveleth these days. The nonprofit provides business development services and lending to commercial ventures in the region and they’re one of two organizations in northeastern Minnesota that are connecting businesses stressed by the impact of the COVID-19 pandemic to emergency loans.
Both the Entrepreneur Fund and the Northland Foundation are the point of access for emergency funds made available through the Minnesota Department of Employment and Economic Development, or DEED.
With hundreds of area businesses either shuttered or working a skeleton crew during the current statewide shelter-at-home order issued by Gov. Tim Walz, many businesses in the region have seen their revenues plunge in the past two weeks as most of their customers have hunkered down at home in an effort to slow the spread of the deadly coronavirus. The emergency loans, which include both state and federal funds, are one way that the government can help small businesses survive one of the most challenging economic disruptions in American history.
The $2.2 trillion federal stimulus signed into law late last week will also be making approximately $350 billion in loans available to small businesses, either through community-based banks or through the Small Business Administration, or SBA.
“We have not heard yet how they plan to roll that out,” said Greg Buckley, president of the Tower branch of Frandsen Bank and Trust. “We’re still waiting to hear about the role that community banks will play. Hopefully we’ll find out soon.”
Nonprofit lenders are in much the same boat. “We’re just collecting information, now,” said Steve Peterson, senior loan manager with the Entrepreneur Fund. “They haven’t given us the rules, yet,” he said.
As of Tuesday, Peterson said he has many dozens of businesses seeking aid already on his list. That’s likely to grow as more business owners begin to feel the effects of the shelter-at-home order along with enforced closures of bars, restaurants, and other public establishments.
While the state-funded grant program is geared towards businesses that have been directly impacted by mandated closures, the federal funds are expected to be more widely distributed. Some of the federal funds are already available through the Small Business Administration’s Disaster Loan program. All businesses in Minnesota are potentially eligible and the application can be done entirely online. Go to www.sba.gov/disaster to begin an application. Businesses can apply for up to $2 million in disaster funding through the SBA. The loans may be used to pay outstanding bills or payroll but are not intended to replace lost sales or profits, or for use in business expansions. Interest rates range from 3.75 percent for businesses and 2.75 percent for nonprofits.
Businesses can also apply for an up to $10,000 advance on a disaster loan even as they’re working on the full application for greater funds. The form to apply for the advance is part of the application for the disaster loan. If approved, the advance funds can be used for payroll and other operating expenses and the funds are forgivable.
Those applying through the SBA website will need to be patient. Due to high demand, the agency’s website has been slowed considerably. Consider applying early in the morning or late at night when usage is generally lower.
Businesses can also apply for a state-funded program, known as Small Business Emergency Loans, which offers interest-free loans ranging from $2,500-$35,000, and will be determined based on the business’s economic injury and its financial need. The loans can be repaid over five years and the first six months of payments can be deferred. Partial loan forgiveness is also possible with these loans. For now, it appears that these funds are primarily intended to go to businesses in the personal service and hospitality industries, which have been hard hit by the recent shutdown orders. Contact the Entrepreneur Fund at (218-744-4191) or email alex@northlandfdn.org at the Northland Foundation for assistance in applying for these funds.