HARTFORD, CT – Not all small businesses will qualify for a loan from the U.S. Small Business Administration and it was unclear Thursday if the state of Connecticut’s new bridge loan program will fill the gap.
The details of the program are expected to be finalized early next week, according to Commissioner David Lehman of the Department of Economic and Community Development.
Lehman said they expect the low-interest loans will be for a short period of time, maybe 12 to 18 months, to help businesses weather the loss of revenue from the slowdown or closure of business related to COVID-19.
The U.S. Small Business Administration approved Gov. Ned Lamont’s request for an “economic disaster” declaration Monday, which allows businesses to apply for up to $2 million in loans. The interest rates on the loans will range between 2.75% for nonprofits and 3.75% for small businesses with repayment terms of up to 30 years.
But not all businesses qualify for SBA loans. Self-employed individuals who can’t collect unemployment are excluded, and the SBA is getting crushed with more requests than it can handle.
“We understand there’s a need here to provide more capital to business,” Lehman said.
He said the interest rates for the bridge loan program will be lower, but the repayment period will be much shorter.
He said they want to make sure the state has enough employees to be able to process the loan requests.
It was unclear Thursday what types of businesses the state of Connecticut would be targeting and whether DECD would need any sort of legislative approval. The legislative session has been put on hold until March 30, but that is expected to be extended after leaders meet next week to discuss how they will handle the rest of the session.
A survey of around 3,000 businesses by AdvanceCT, formerly the Connecticut Economic Resource Center, found that 50% are offering remote work opportunities to their employees. The survey also found about 50% remain open, 36% have reduced their operations, and 12% have closed. A total of 80% of businesses surveyed are expecting to see reduced sales as a result of the situation, Lehman said.
Gov. Ned Lamont told 2,000 businesses and individuals who joined him on the call that this was worse than the Great Recession.
He said when the Great Recession hit and he was still operating his cable business, his revenue disappeared but his fixed costs – like health insurance and salaries – remained.
“I’m doing everything I can to reduce those fixed costs and make it easier for you to stay in business,” Lamont said.
He said the good news is that the banks and lending institutions are better capitalized than they were in 2008 and 2009.
Between Friday, March 13, and Thursday, the state had received more than 56,000 unemployment claims.
Unemployment pays roughly 50% of your weekly gross earnings over the previous 15 months and the benefits are for 26 weeks.
The average weekly unemployment benefit is $376. It’s capped at $649.
Lehman said they’ve done what they could to relax the requirements for unemployment, so any employer who needs to temporarily shut down their business can have their employees file for unemployment. It will apply to furloughed employees or those who have been temporarily laid off.
There’s also a shared work program where employers can supplement the wages of employees between 10% and 60% of their wages.
In the meantime, legislation is making its way through Congress that would fund up to two weeks paid sick leave and 12 weeks paid leave to care for a family member.
“I’m going to do everything I can to backstop that at the state level,” Lamont said.
Lamont said they are working on a legislative package because they’re not sure when the federal government will deliver on its promises.