Austin small businesses and nonprofits hurt by the COVID-19 crisis can now apply for emergency loans from the U.S. Small Business Administration (SBA). The Austin City Council is also considering a gap-financing program that could provide loans to applicants as they await the federal loans.
The SBA disaster assistance loans became available in Texas after the state received a federal disaster declaration over the coronavirus. The loans offer borrowers up to $2 million to pay “fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact,” according to this SBA factsheet.
The loans can be paid back over terms as long as 30 years, with interest rates of 3.75% for small businesses and 2.75% for nonprofits.
Businesses and nonprofits can apply through the SBA website.
The Austin City Council is also considering the creation of an Economic Injury Disaster Loan Program for local businesses and nonprofits. Loans given through this program would provide gap financing of up to $35,000 to those awaiting federal SBA loans.
The process to apply for a city loan would be similar to the federal application process.
“We see this as a two-step process,” Veronica Briseño, director of the City of Austin Economic Development Department, said. “Once the SBA receives that application it could take four to five weeks [to be approved], which is why we're proposing this local program.”
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The city disaster loan program is being modeled after Austin’s Family Business Loan Program. Businesses must have between two and 100 employees to be eligible for the program, Briseño said.
She said loan preference may be given to Austin businesses that are “engaged in industrial, retail or distribution activities.” The final rules for the program are up to Austin City Council, however.
Council members expect to vote on the program Thursday.
Saturday's announcement marks a new step in responding to the economic devastation caused by the virus outbreak, a crisis that may continue even after the pandemic is over.
Earlier this week, Austin officials urged workers and business owners left reeling from COVID-19-related closures to avail themselves of local aid programs. The problem was that many of those programs didn’t have the resources to meet even pre-pandemic needs.
For example, the city's website listed the Housing Authority for the City of Austin as a resource for homeowners and renters who fear they may lose their homes.
As a result, HACA said in an email, the agency was “bombarded by panicked calls” from people seeking help even though it has no vacancies and it's housing waitlists and vouchers are closed.
This post has been updated.