Montrose Group COVID 19 Business Recovery Action Center

The Montrose Group like the rest of the world is focused on COVID 19, is supportive of tough decisions by public officials to limit the spread of the virus, praying for the safety of first responders and health care staff treating patients all with an eye on how we adopt public policy and economic development strategies that prepare for a post-COVID 19 revival.  To centralize not just information but help economic development organizations and company’s recover from COVID 19, the Montrose Group created the Montrose Group COVID 19 Business Recovery Center.

 

The Montrose Group COVID 19 Recovery Services

The Montrose Group serves companies and communities efforts to thrive during COVID 19. 

PPE Procurement.  The Montrose Group assists companies producing or shifting production to personal protective equipment (PPE) and other in-demand products by negotiating economic development incentives and financing and advocating for company procurement.

Economic Stimulus Advocacy. The Montrose Group represents public and private sector clients seeking COVID 19 policy solutions with local, state and federal governments by identifying the policy challenge, building a solution, identifying key public leaders, understanding the government process, building support from stakeholders and advocating for policy solutions.

Workforce Development Programs.  The Montrose Group assists economic and workforce development leaders to develop tailored workforce development programs to transform the unemployment crisis created by COVID 19 into an asset by creating state sanctioned SharedWork programs, regional skills gap, workforce development, wage and benefits and financing strategies to build a regional workforce partnership. 

Small Business Finance Counseling.  The Montrose Group is helping companies outsource COVID 19 created financing needs through services that include business plan development, company financials analysis, financial needs analysis, identification of financing options, development of financing applications and advocacy for financing requests. 

Montrose Group COVID 19 Federal Stimulus Webinar: Role of Federal Community Development Block Grant Program in Economic Recovery 

Join us for a webinar on Apr 10, 2020 at 11:00 AM EDT

Register now!

The $2.2 T COVID 19 federal stimulus program is designed to support the economic health of the United States through direct support to the public, local and state governments and private companies all of which may be struggling to survive the current public health crisis. The federal Housing and Urban Development Department’s Community Development Block Grant program received $5B in federal stimulus funding to support neighborhood and economic development. Join the Montrose Group and leading CDBG experts like Mary Oakely from the state of Ohio’s Development Services Agency for a webinar to learn what funding the COVID 19 federal stimulus legislation provides for communities across the United States and how this additional CDBG funding can revitalization communities, create jobs and support company growth. 

After registering, you will receive a confirmation email containing information about joining the webinar. 

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Defining the Negative Economic Impact of COVID 19

Limiting the public health impact on its citizens is the first responsibility of government but government at the same time needs to start healing the negative economic impact of the public health cure.   To understand the economic impact on COVID 19 on states like Ohio it is critical to understand the current size, state and makeup of the Ohio economy.  As the Montrose Group outlined in a 2019 Ohio Competitiveness Report, Ohio has the seventh largest economy among the fifty states with a $608.1 B GDP as measured in 2015.  Pennsylvania ranked 6th in GDP of states and New Jersey as 8th.   If it were a country, Ohio’s economy would be the 21st largest in the world—just below Saudi Arabia.  On a per capita basis, Ohio’s GDP of $52,363 ranked 26th largest in the nation in 2015.  Ohio benefits from a large and diverse economy in a prime strategic location.  

Ohio’s economy when reviewed by industry illustrates it similar to the rest of the nation and has transitioned to providing services more than manufacturing goods.  

As the table above illustrates, Ohio illustrated dramatic growth in its service, professional service, education and health care industry sectors and equally dramatic declines in the state’s manufacturing and goods producing sector.  There is no news in this analysis.  Ohio now operates a service-based economy driven by new players that include leisure and hospitality. As an example, the creative services sector, constituting the arts and related industries and a key part of the Leisure and Hospitality industry, provide $41B in economic impact for the state of Ohio that includes 289,000 jobs and $4.5 billion in tax revenue according to a 2019 study by Bowling Green State University.  Unfortunately, the leisure and hospitality, transportation, employment services and travel industry will have the largest impact as measured by job losses from COVID 19 forced business closures as the table below illustrates. 

Source: Moody Analytics, Wall Street Journal, March 25, 2020

The COVID 19 related business closures include all of those 289,000 Ohio’s creative industry jobs and the companies and nonprofit employers.  A sustained closure will eliminate many of these jobs, companies and nonprofits on a permanent basis as a financial hole will be created that they cannot climb out of.   These workers are typically lower skilled and lower wage employees who often survive paycheck to paycheck.  Federal government wage data indicates the 16.8 M workers in the Leisure and Hospitality occupation category earn $16.78 an hour but work on average only 25 hours a week—earning $21,931 a year which is nearly $10,000 below the nation’s per capita income.  Thus, the workers in the industry impacted the most by COVID 19 are the lease able to afford not working for three months. 

The service industry is not alone in the negative economic impact of COVID 19.  COVID 19 is creating massive job losses and company and nonprofit closures in the service sector that dominates the American and Ohio economy.  The near-term negative economic impact of COVID 19 is frightening:

⦁ Manufacturers like Honda, Ford, Fiat Chrysler and others have temporarily shut down U.S. facilities;

⦁ The National Restaurant Association estimates that restaurants and the foodservice industry could sustain $225 billion in losses and eliminate 5-7 million jobs over the next three months;

⦁ The International Chamber of Shipping has estimated that the pandemic has cost the worldwide industry around $350 million per week, and, in January, 2020, North American transport volume was down 9.4%, impacting the over 225,000 Americans working in the freight transportation industry according to recent USA Today reports; and 

⦁ Ohio unemployment jobless claims moved from under 5,000 the week of March 9, 2020 to nearly 140,000 the week of March 16, 2020 reaching nearly a record high from 1981 when steel mills and factories across the state were closing during a major national recession.

The economic impact of COVID 19 will create a recession in 2020.  Current estimates by economist see a double digit drop in the nation’s Gross Domestic Product in the 2nd Quarter of 2020 and it is optimistic to think there will be any positive quarterly GDP growth in 2020.  

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COVID 19 Small Federal Business Finance Options

Small businesses, nonprofits, and employees are facing unprecedented concerns and financial instability as a result of the COVID-19 pandemic. Across the nation, several measures are being taken to offer necessary financial support to the backbone of our economy – our small businesses. While United States and the world navigate through this crisis one this is certain, the American economy is resilient, and it will soon flourish again. As economic development practitioners we must remain focused on delivering critical resources to our business and workforce community.

U.S. SBA Economic Injury Disaster Loan Program

Small businesses and nonprofits in nearly all the states are eligible to apply for low-interest, long-term loans of up to $2million through the U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan program. Qualifying small businesses are those without credit available elsewhere. Loan fund uses include: fixed debts; payroll; accounts payable; and other bills that cannot be paid because of disaster’s impact.  Interest rates for small businesses are sets for 3.75% and nonprofits for 2.75% with loan terms of up to 30 years, based on borrower’s ability to repay.

Other Small Business Administration Products

SBA 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings; purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.

Express loan program provides loans up to $350,000 for no more than 7 years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as the standard 7(a) loan.

Community Advantage loan pilot program allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000. The uses of proceeds are the same as the standard 7(a) loan.

504 loan program is designed to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.

Microloan program involves making loans through nonprofit lending organizations to underserved markets. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (does not include real estate). The maximum loan amount is $50,000 with the average loan size of $14,000.

Federal Government Community Development Block Grant Program

The Community Development Block Grant (CDBG) program is a flexible program that provides communities with resources to address a wide range of unique community development needs. Beginning in 1974, the CDBG program is one of the longest continuously run programs at HUD. The CDBG program provides annual grants on a formula basis to 1209 general units of local government and states.

Program Areas

CDBG Entitlement Program provides annual grants on a formula basis to entitled cities and counties to develop viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low- and moderate-income persons.

CDBG State Program allows States to award grants to smaller units of general local government that develop and preserve decent affordable housing, to provide services to the most vulnerable in our communities, and to create and retain jobs.

CDBG HUD Administered Non-Entitled Counties in Hawaii Program provides annual grants on a formula basis to Hawaii, Kauai, and Maui counties to provide decent housing and a suitable living environment and expand economic opportunities, principally for low- and moderate-income persons.

CDBG Insular Area Program provides grants to four designated insular areas: American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands to provide decent housing and a suitable living environment and expand economic opportunities, principally for low- and moderate-income persons.

CDBG Program Colonias Set-Aside requires the border states of Arizona, California, New Mexico and Texas to set aside a percentage of their annual State CDBG allocations for use in the Colonia to help meet the needs of the Colonias residents in relationship to the need for potable water, adequate sewer systems, or decent, safe and sanitary housing.

Recovery Housing Program  allows states and the District of Columbia to provide stable, transitional housing for individuals in recovery from a substance-use disorder.

Section 108 Loan Guarantee Program is the loan guarantee provision of the CDBG Program and provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects.

Neighborhood Stabilization Program provided grants to communities that suffered from foreclosures and abandonment to purchase and redevelop foreclosed and abandoned homes and residential properties. Congress authorized NSP grants between 2008 and 2011; no new funds are available.

Federal Government Economic Development Administration Programs

The U.S. Economic Development Administration’s investment policy is designed to establish a foundation for sustainable job growth and the building of durable regional economies throughout the United States. This foundation builds upon two key economic drivers – innovation and regional collaboration. Innovation is key to global competitiveness, new and better jobs, a resilient economy, and the attainment of national economic goals. Regional collaboration is essential for economic recovery because regions are the centers of competition in the new global economy and those that work together to leverage resources and use their strengths to overcome weaknesses will fare better than those that do not. EDA encourages its partners around the country to develop initiatives that advance new ideas and creative approaches to address rapidly evolving economic conditions.

Public Works

Empowers distressed communities to revitalize, expand, and upgrade their physical infrastructure to attract new industry, encourage business expansion, diversify local economies, and generate or retain long-term, private sector jobs and investment.

Printable Public Works Program (PDF)

Economic Adjustment

Assists state and local interests in designing and implementing strategies to adjust or bring about change to an economy. The program focuses on areas that have experienced or are under threat of serious structural damage to the underlying economic base. Under Economic Adjustment, EDA administers its Revolving Loan Fund (RLF) Program, which supplies small businesses and entrepreneurs with the gap financing needed to start or expand their business.

Printable Economic Adjustment Program (PDF)

Planning

Supports local organizations (Economic Development Districts, Indian Tribes, and other eligible areas) with short and long-term planning efforts. The Comprehensive Economic Development Strategy (CEDS) Content Guidelines, provides suggestions, tools, and resources for developing comprehensive economic development strategies.

Printable Planning Program (PDF)

Build to Scale (formerly known as Regional Innovation Strategies)

The Build to Scale (B2S) Program builds regional economies through scalable startups and includes three competitions supporting entrepreneurship, acceleration of company growth and increased access to risk capital across regional economies.

Trade Adjustment Assistance for Firms

A national network of 11 Trade Adjustment Assistance Centers to help strengthen the competitiveness of American companies that have lost domestic sales and employment because of increased imports of similar goods and services.

Printable Trade Adjustment Assistance for Firms Program (PDF)

University Centers

A partnership of the federal government and academia that makes the varied and vast resources of universities available to the economic development community.

Printable University Centers Program (PDF)

Report: Making Connections, Evaluation Project to Assess Best Practices in EDA’s University Center Program (PDF)

Research and National Technical Assistance

Supports research of leading edge, world class economic development practices and information dissemination efforts.

Printable Research and National Technical Assistance Program (PDF)

Local Technical Assistance

Helps fill the knowledge and information gaps that may prevent leaders in the public and nonprofit sectors in distressed areas from making optimal decisions on local economic development issues.

Printable Local Technical Assistance Program (PDF)

 

Montrose Group COVID 19 Workforce Development Services

Layoff Aversion Programs Retain Workforce and Provide Worker Funding

Many city, county and state welfare offices have layoff aversion programs to permit employers to reduce the hours of workers and let these workers utilize the welfare system to make up for this loss of income.  Many states offers a worthy layoff aversion program worthy of review. Implementing a SharedWork program can create a voluntary layoff aversion program that allows workers to remain employed and employers to retain their existing workforce during times of reduced business activity. A SharedWork program functions helps “close the gap” between what the employee is getting paid during reduced work schedules and what the employee was getting paid under normal business activity.  The benefits of a SharedWork program is participating employees worked the reduced hours each week and the state welfare office provides the eligible individuals unemployment insurance benefits proportionate to their reduced hours, but the hours must be uniformly reduced by 10 to 50 percent and program benefits can remain in effect for up to 52 weeks.  Qualification requirements includes:

⦁ Employers have at least two affected employees that do not work on a seasonal, temporary or intermittent basis;

⦁ Employers must be current on all state unemployment insurance reporting, contributions, reimbursements, interest and penalties due;

⦁ Employees must have earned enough wages and worked at least 20 weeks in “covered employment,” for an employer that paid unemployment taxes;

⦁ Employees must not be otherwise disqualified from receiving unemployment benefits, for example because of unresolved suspensions; and

⦁ Working a second or part-time job will affect weekly SharedWork benefits.

Skills Gap Analysis

The Montrose Group analyzes a region’s demographics, educational supply, existing labor supply, wages for key occupations, demand for key occupations, and cluster profiles of the primary industries and connects those to current and future occupational skills the region will need and identifies what educators need to train for based on the real-time skills employers want.  

Wage and Benefit Analysis

The Montrose Group analyzes regional occupational wage and benefit data and peer benchmarking for primary industries to understand if a region’s wage and benefits rates give it a competitive advantage or disadvantage with like competitors in key industries.

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State COVID 19 Business State and Local Finance and Policy Forum

State government leaders are working actively with the federal government and economic development leaders to support the survival and growth of local employers during COVID 19.  Below is a state by state list of business programs designed to assist companies impacted by COVID 19.  In summary, the vast majority of states have gained certification to access the $50B in Small Business Administration Economic Injury Disaster Loan Program and most of the remaining states are likely in process of gaining that certification, 14 states are offering some form of state government or private sector loan program for businesses impacted by COVID 19, Delaware is offering the use of Community Development Block grants for impacted businesses and communities, 13 states are offering some form of tax relief for businesses impacted by COVID 19 primarily in the form of delaying the filing of taxes and tax payments in line with the federal government’s tax filing delays and two states, Kansas and Delaware, created programs to specifically support the hospitality industry.

Survey of State COVID 19 Business Support Programs

Alabama

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Alaska

⦁ Established the Alaska COVID-19 Emergency Business Loan Program to provide 100% state-guaranteed loans to Alaskan businesses for immediate relief and loan program will be administered by local banks and structured to meet Alaska’s unique needs.

Arizona

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Arkansas

⦁ Allocation of $4,000,000 from the Governor’s Quick Action Closing Fund, and an additional $3,000,000 from the Attorney General’s Consumer Education and Enforcement Fund for eligible companies may apply for a loan or loan guaranty of up to $250,000  with a prioritization for small to medium-sized companies that are in the supply chain of essential goods and services (including healthcare, food manufacturing, logistics) including both loan guaranties and direct lending to businesses.

⦁ Up to $12 million in CDBG assistance will be made available for COVID19 relief and recovery for grants to eligible local governments with which to provide direct economic assistance in the form of loans to companies impacted by COVID19 and grants to clinics, hospitals and other non-profits who are working hard to provide care in rural Arkansas and to vulnerable populations such as the homeless.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

California

⦁ California’s Infrastructure and Economic Development Bank (IBank) will issue loan guarantees up to 95 percent of the loan through its partner Financial Development Corporations to help small business borrowers who were impacted by disasters or public safety power shutoffs and who need term loans or lines of credit for working capital. Small businesses, including small farms, nurseries, agriculture-related enterprises and nonprofits that have suffered an economic loss Resources for Businesses and/or physical damage may apply, and this disaster program will help lenders and small businesses by providing loan guarantees of up to $1 million for small business borrowers in declared disaster areas; and

⦁ California’s IBank is offering loans from $500 to $10,000 to low-wealth entrepreneurs in the declared disaster and emergency areas through its Jump Start Loan Program, IBank established the Jump Start Loan Program in 2016 as a small loan and financial literacy/technical assistance program designed for low-income small businesses in low-wealth communities, including businesses owned by women, minorities, veterans, people with disabilities and those previously incarcerated, and access to IBank’s Disaster Relief Loan Guarantee Program and Jump Start Loan Program can be made through its partner Financial Development Corporations (FDCs).

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Colorado

⦁ The Colorado Department of Labor and Employment (CDLE) published emergency rules which temporarily require employers in certain industries to provide a small amount of paid sick leave to employees with flu-like symptoms while awaiting COVID-19 testing.

⦁ If you work for a ski resort or other employer that closed or reduced your hours to help stop the spread of COVID-19, you can file or reopen an unemployment claim through the Colorado Department of Labor and Employment.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Connecticut

⦁ The Connecticut Department of Revenue Services has extended deadlines for filing and payments associated with certain state business tax returns, effective immediately, the filing deadlines for certain annual tax returns due on or after March 15, 2020, before June 1, 2020, are extended by at least 30 days, and the payments associated with these returns are also extended to the corresponding due date in June.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Delaware

⦁ Created Hospitality Emergency Loan Program to provide no-interest loans are capped at $10,000 per business per month to cover rent, utilities and other unavoidable bills but cannot be used for personnel costs, the loans have a 10-year term with payments deferred for nine months, the Delaware Division of Small Business will administer the program using existing state funds, and eligible businesses must have been in operation for at least a year, have annual revenue below $1.5 million and be in a certain hospitality-connected industries.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

District of Columbia

⦁ District of Columbia City Council created a small business grant program to assist nonprofit organizations and small contractors who do not qualify for unemployment insurance.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Florida

⦁ Florida Small Business Emergency Bridge Loan expanded for business owners with two to 100 employees located in Florida affected by COVID-19 for short-term loans up to $50,000, these loans are interest-free for up to one year and are designed to bridge the gap to either federal SBA loans or commercially available loans.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Georgia

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Hawaii

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Idaho

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Illinois

⦁ Illinois Department of Revenue is waiving any penalty and interest that would have been imposed on late Sales Tax payments from qualified taxpayers for taxpayers operating eating and drinking establishments that incurred a total Sales Tax liability of less than $75,000 in calendar year 2019.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Indiana

⦁ Indiana will align with the federal government to delay state income tax payments from April 15 to July 15 and penalties will be waived for 60 days for property tax paid after May 11.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Iowa

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Kansas

⦁ Hospitality Industry Relief Emergency fund provides eligible businesses in Kansas will be able to apply for a one-time loan of up to $20 thousand at 0% interest for a period of 36 months with be no principal or interest payments for the first four months.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Kentucky

⦁ Mirrored the federal government by delaying the tax filing deadline by three months from April 15 to July 15.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Louisiana

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Maine

⦁ Finance Authority of Maine and participating lenders will make special terms available to Maine-based businesses that have experienced interruption or hardship due to COVID-19, various benefits include: loans up to $50,000 offered at reduced interest rates; interest-only payments; up to 75% pro-rata loan insurance on loans up to $100,000; interim financing in conjunction with the SBA wherein FAME makes loan proceeds available while approved SBA borrowers await federal funding.

⦁ COVID-19 Relief Consumer Loan Program provides no-to low-interest consumer loans through a loan guarantee program involving Maine’s banks, credit unions, and FAME. Interested borrowers should contact their local bank or credit union (not FAME) to see if the lender is offering this program and to apply, the program offers loans of up to $5,000 (minus any unemployment benefits received by borrower) and a borrower may apply for up to three (3) loans, one per each 30-day period.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Maryland

⦁ Maryland business and individual income taxpayers will be given a 90-day extension for tax payments, no interest or penalty for late payments will be imposed if 2019 tax payments are made by July 15, 2020.

⦁ Comptroller extended business-related tax filing deadlines to June 1.

⦁ Businesses who paid their Maryland Sales & Use Taxes for March early may request a refund of their payment.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Massachusetts

⦁ Massachusetts offered tax relief that includes postponing the collection of regular sales tax, meals tax, and room occupancy taxes that would be due in March, April and May so that they will instead be due on June 20, all penalties and interest that would otherwise apply will be waived, businesses that paid less than $150,000 in regular sales plus meals taxes in the year ending February 29, 2020 will be eligible for relief for sales and meals taxes, and business that paid less than $150,000 in room occupancy taxes in the year ending February 29, 2020 will be eligible for relief with respect to room occupancy taxes.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Michigan

⦁ Michigan Small Business Relief Program provides both grants and loans to small businesses affected by the coronavirus starting on or around April 1, grants will be available in amounts of up to $10,000 to help cover working capital, loans will be available in amounts from $50,000 to $200,000 at interest rates of 0.25%, companies with 50 employees or fewer can qualify for grants, while loans are targeted at companies with 100 employees or fewer that can’t get credit elsewhere. In both cases, businesses must show income loss.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Minnesota

⦁ Restaurants, bars and other hospitality businesses impacted by the temporary closure order have a 30-day grace period in paying sales and use tax, during this time the Minnesota department of Revenue will not assess penalties or interest, this means that affected businesses with a monthly Sales and Use Tax payment due March 20, 2020 will have until April 20 to make that payment, and these customers should still file their return by March 20.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Mississippi

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Missouri

⦁ Income tax payment deadlines for individual and corporate income returns with a due date of April 15, 2020, are extended until July 15, 2020, applies to all individual income tax returns, income tax returns filed by C Corporations, and income tax returns filed by trusts or estates, individuals and corporations will also include estimated tax payments for tax year 2020 that are due on April 15, 2020, and penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020.

Montana

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Nebraska

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Nevada

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

New Hampshire

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

New Jersey

⦁ New Jersey Economic Development Authority (NJEDA) has a portfolio of loan, financing, and technical assistance programs available to support small and medium-sized businesses.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

New Mexico

⦁ The New Mexico Economic Development Department (NMEDD) has created a program to assist businesses seeking emergency loans or lines of credit to deal with negative economic impacts from COVID-19. NMEDD can guarantee a portion of a loan or line of credit up to 80% of principal or $50,000. Loan proceeds are flexible and can be used for (and not limited to) the following: working capital, inventory and payroll.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

New York

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

North Carolina

⦁ N.C. Department of Revenue will not impose a penalty upon individuals and businesses who do not pay their outstanding State income tax liability on tax returns due on April 15, 2020, so long as the taxpayers pay the tax due by July 15, 2020.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

North Dakota

⦁ Loans and equity investments are available to companies certified as primary sector under the North Dakota Development Fund, evolving Rural Loan Fund and the Venture Capital Program: up to $1 million, lower than market interest rate, can be in the form of a loan or equity investment, and funding can be used for working capital, equipment or real estate.

⦁ Rural Growth Incentive Program Emergency Loans-the Department may declare an emergency and make loans to “Essential Service Companies”  that includes gas stations; pharmacies; grocers and, in some cases, restaurants in communities with less than 2,500 in population are eligible, requires a dollar-for-dollar match by the city, a community can apply for $25,000 to $75,000 in matching funding, and loan terms are based on individual needs.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Ohio

⦁ Ohio is allowing businesses to forgo workers’ compensation payments for March, April and May to inject $200 M into the economy.

⦁ Ohio granted the Ohio Department of Job and Family Services (ODJFS) with the authority to accept and grant requests for unemployment compensation suspending the normal 1-week waiting period and give relief to applicants who are not offered paid leave through their job, as well as those who have been quarantined by a medical professional, their employer, or whose employers must temporarily close by exempting from the requirement that they be actively seeking work to gain unemployment benefits.

⦁ Ohio Department of Commerce is implementing a one-time liquor buyback option to support bars and restaurants closed by order of Governor DeWine.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Oklahoma

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Oregon

⦁ WaFD Bank Small Business Lifeline- bank is offering small business lines of credit up to $200,000 interest free for 90 days to businesses affected by Coronavirus (COVID-19), will expedite processing for lines of credit up to $30,000 to existing and new credit worthy clients in their regional market who have been in operation at least two years and can show a 10 percent loss in revenue due to the impact of Coronavirus.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Pennsylvania

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Rhode Island

⦁ For businesses, municipalities, K-12 and other entities, Microsoft is providing six months of Office 365 tools for free to enable remote collaboration, file sharing and video conferencing and they’re also offering free assistance to set up these tools.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

South Carolina

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

South Dakota

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Tennessee

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Texas

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Utah

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Vermont

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Virginia

⦁ Virginia Businesses impacted by COVID-19 can request to defer the payment of state sales tax due tomorrow, March 20, 2020 for 30 days, when granted, businesses will be able to file no later than April 20, 2020 with a waiver of any penalties, the Virginia Department of Taxation is extending the due date of payment of Virginia individuals and corporate income taxes, while filing deadlines remain the same, the due date for individual and corporate income tax will now be June 1, 2020, but interest will still accrue, so taxpayers who are able to pay by the original deadlines were encouraged to do so.

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Washington

⦁ Washington’s State Employment Security Department’s (ESD) Paid Family and Medical Leave program can provide paid leave benefits for Washington workers who need to take time off from work due to a serious health condition or to care for a family member with a serious health condition, and certification by a healthcare provider is required for applications for Paid Family and Medical Leave due to a serious health condition; and

⦁ If COVID-19 disrupts a Washington business and causes a mass layoff or closure, the Washington ESD and its local workforce development board partners can respond with Rapid Response services and funding to help impacted workers get connected to unemployment benefits and re-employment services, including re-training, worker support services, and referrals to other social services.

West Virginia

⦁ Small business impacted by COVID 19 without credit available elsewhere located in the state are eligible to apply for low-interest (small business 3.75 and nonprofits 2.75), long-term (up to 30 years based upon borrower’s ability to repay) loans for fixed debts payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact, of up to $2 M through the U.S. Small Business Administration’s Economic Injury Disaster Loan program.

Wisconsin

⦁ Wisconsin Economic Development Corporation approved $5 million in funding for Small Business 20/20 that will provide grants of up to $20,000 to targeted businesses with no more than 20 employees to cover rent and to meet payroll expenses, including paid leave (including sick, family and other leave related to COVID-19).

Wyoming

⦁ Wisconsin Economic Development Corporation approved $5 million in funding for Small Business 20/20 that will provide grants of up to $20,000 to targeted businesses with no more than 20 employees to cover rent and to meet payroll expenses, including paid leave (including sick, family and other leave related to COVID-19).

Survey of City COVID 19 Business Support Programs

Chicago

⦁ Chicago’s Small Business Resiliency Fund, starting March 31, small businesses in Chicago can apply for low-interest loans of up to $50,000 with repayment terms of up to five years, the amount of the loan you’ll qualify for depends on your revenues before business was affected by the coronavirus, applicants must demonstrate a 25% drop in revenue, have less than $3 million in revenue and fewer than 50 employees, and have no current tax liens or legal judgments.

Denver

⦁ Denver’s Small Business Emergency Relief program offers cash grants of up to $7,500 to businesses in industries particularly hard-hit by the coronavirus for small businesses that have lost the ability to operate, including restaurants, retail shops, barbershops and nail salons, grants will be distributed monthly, and the first applications will be due March 31.

Los Angeles

⦁ Los Angeles Small Business Emergency Microloan Program provides businesses and microenterprises in Los Angeles that are responsible for providing low-income jobs can get an emergency microloan of $5,000 to $20,000, loans with repayment terms of six months to one year carry an interest rate of 0% and five-year loans have interest rates of 3% to 5%, to get a loan, you must meet requirements including having “reasonable and responsible” individual credit history, committing to use the loan for working capital only and ensuring your business is located within the City of Los Angeles, and if you own 20% or more of the business, you must guarantee the loan, and Los Angeles has also instituted a moratorium on evictions of businesses impacted by the coronavirus through March 31.

New York City

⦁ New York City Employee Retention Grant Program offers small businesses with one to four employees a grant of up to $27,000 that covers 40% of payroll costs over the course of two months for companies that lost 25% of your revenue due to the coronavirus; and

⦁ New York City Small Business Continuity Fund is available for a business with fewer than 100 employees, you can get up to $75,000 in interest-free loans from the city to cover revenue losses, eligibility includes businesses within the five boroughs that have experienced at least a 25% reduction in revenue can qualify, with no tax liens or legal judgments, with a loss in revenue and able to repay the loan.

Portland

⦁ In Portland, small businesses in the Jade District and Old Town Chinatown neighborhoods can apply for emergency funding to support their businesses by March 23. Up to $190,000 total is available from local government sources. Priority will be given to Asian- and Pacific Islander-owned businesses.

San Francisco

⦁ San Francisco COVID-19 Small Business Resiliency Fund is offered for businesses with between one and five employees can apply for up to $10,000 in emergency funding to help cover rent and employee salaries, who lost 25% or more of their revenue, has less than $2.5 million in gross receipts and is properly licensed to operate in San Francisco, the city of San Francisco has also initiated a moratorium on evictions for small- and medium-sized businesses whose revenue has been affected by the coronavirus effective for 30 days starting March 17, and the mayor has the capability to extend it for another 30 days.

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COVID 19 Market Impact Intelligence

COVID 19 to Create Corporate Site Location Winners & Losers in 2020

With or without COVID 19, the United States remains a global economic powerhouse.  The U.S. has an unmatched base of manufacturing companies, leadership in quality global health care, an open and thriving capital market and financial services industry and the largest venture capital industry in the world driving technology disruption and a high-tech revolution going on for thirty years.  However, COVID 19’s near term economic impacts should not be underestimated:  the closure of manufacturers like Honda, Ford, Fiat Chrysler and others generates lost employment with these companies and a large supply chain; restaurants are estimated to lose $225B and 5-7 M jobs; global shipping is estimated by to down $350 a week; closure of Broadway alone is jeopardizing a $1.8 B New York tourism industry; and states unemployment ranks are swelling—Ohio’s jobless unemployment claims moved from under 5000 the week of March 9 to nearly 140,000 to finish the week of March 16, 2020 reaching near a record high.

Past thoughts on corporate site location trends trying to pick industry winners and loser are well.. in the past.  We are in the COVID 19 world now.  Limiting the spread of the virus and treating the sick is the immediate concern and tough decisions by public officials to make this happen need to be supported no matter the near-term disruption to life and commerce.  However, a COVID 19 economy creates corporate site location winners and losers in 2020.  Some industries and weaker companies will collapse while other existing industries will prosper and new companies will grow.  

COVID 19 Corporate Site Location Losers.  Prime among the COVID 19 corporate site location losers are underperforming, lowly capitalized or overly full markets in industries that were struggling prior to COVID 19.  Look at traditional retail.  Large, traditional, 1950’s era shopping malls and their cousin the 1980’s retail strip center are closing for public health reasons may not reopen when COVID 19 is gone but not forgotten.  These malls and strip have been struggling to compete in the Age of Amazon.  Losing millions of dollars in revenue is likely to kill many of these retail institutions.  Along with the malls is likely more big box retail stores that have not made the transition to the digital age and the distribution fulfillment center.  Craft beer companies are facing equal challenges but not because their market is dying but because their market has overheated.  Many craft beer companies have publicly discussed turning their facilities into sources for hand sanitizer to fill this pressing public need.  Hundreds of restaurants will likely not survive a three-month closure without government support.  Financial services operations like bank branches may have hundreds of locations close and many not open again.  Global manufacturing outside of the United States will also become a harder sell.  Lax environmental and health standards in China and third world countries should cause U.S. policy makers and consumers to question more where the products they use come from. 

COVID 19 Corporate Site Location Winners. Much like COVID 19 corporate site location losers, many of the winners will be in industries who were trending the right way before the public health crisis.  Look at retail’s unruly cousin logistics, distribution and fulfillment centers.  The COVID 19 consumer with the widespread closure of most non-grocery or pharmacy stores is on-line right now shopping on Amazon, Chewy or other on-line retailers to fill their needs.  Assuming these on-line purchases are delivered on time, what starts as a forced consumer behavior is going to become the common practice for millions more global consumers.  Consumers won’t buy less when this public health crisis is over they will just change more how they buy goods and services.  COVID 19 is like “pouring gasoline on a fire” for the logistics, distribution and fulfillment industry. It creates a substantial opportunity for regions with large scale industrial parks prepared with zoning, tax incentives, infrastructure finance and construction financing to add thousands of jobs to make up for other economic losses in the coming months and years.  Equal to logistics growth, the source of COVID 19 will drive more manufacturing back to the United States in many industry categories.  Starting with protective personal equipment, hospital equipment, pharmaceuticals and any product that policy makers and consumers needed in the current crisis but was manufactured in China.  Then add in the hostility that is coming China’s way following the conclusion of the spread of COVID 19.  Hopefully the summer of 2020 will be when the “hangover” from COVID 19 happens.  This should be a period of economic revival but also may be a time when policy makers and consumers really question if “Made in China” is the stamp they want on their products.  Automation in the manufacturing sector makes the United States more appealing for these jobs as fewer, higher skilled, higher wage workers are needed.  Thus, U.S. manufacturing is positioned for future growth.  

Lots can change. We pray COVID 19 is a couple month public health care due to decision action by policy makers and the world’s best first responders, doctors, nurses and health care workers.  We also pray that COVID 19 is followed by a renewed run of large-scale corporate site location projections and substantial economic growth. 

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CDC COVID 19 Guidance for Businesses and Employers

The Centers for Disease Control and Prevention (CDC) offers the most up-to-date information on COVID-19. This interim guidance is based on what is currently known about the coronavirus disease 2019 (COVID-19). For updates from CDC, please see the following:

Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)

Preventing Stigma Related to COVID-19

Share Facts about COVID-19

CDC Coronavirus Disease 2019 (COVID-19) Web page

Information on Coronavirus Disease 2019 (COVID-19) Prevention, Symptoms and FAQ

The following interim guidance may help prevent workplace exposures to acute respiratory illnesses, including COVID-19, in non-healthcare settings. The guidance also provides planning considerations if there are more widespread, community outbreaks of COVID-19.

To prevent stigma and discrimination in the workplace, use the guidance described below and on the CDC’s Guidance for Businesses and Employers web page.

Below are recommended strategies for employers to use now. In-depth guidance is available on the CDC’s Guidance for Businesses and Employers web page:

⦁ Actively encourage sick employees to stay home

⦁ Separate sick employees

⦁ Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees

⦁ Perform routine environmental cleaning

⦁ Advise employees before traveling to take certain steps

⦁ Check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from designated countries with risk of community spread of Coronavirus, and information for aircrew, can be found on the CDC website.

⦁ Additional Measures in Response to Currently Occurring Sporadic Importations of the COVID-19:

⦁ Employees who are well but who have a sick family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

⦁ If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

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COVID 19 Federal Stimulus Programs

 

COVID 19 Small Business Financing Spurred by Federal Stimulus Legislation

COVID 19 has brought the forefront how the United States financing small businesses. According to the U.S. Small Business Administration the United States has over 30 M small business, firms with fewer than 500 workers, employing nearly 60 M Americans or nearly half of the nation’s workforce. Eighty-one percent, or 24.8 M, had no employees, and nineteen percent, or 5.9 M, had paid employees as measured by the SBA in 2017. Prior to COVID 19, small business was growing at a strong rate. According to the SBA, from 2000 to 2018, small businesses created 9.6 M net new jobs while large businesses created 5.2 M. Thus, they accounted for 64.9% of net new job creation in the period. Small business is a critical part of the American economic engine.

The passage of the federal Stimulus legislation has substantial changes to the U.S. Small Business Administration which should make this organization a prime stop for companies, sole proprietors, independent contractors, self-employed, tribal business, 501 (c)(3), or a 501 (c)(19) veterans organization with less than 500 employees (full time, part time or other status) seeking financing. Also eligible for SBA funding are companies in the accommodation and food services sector (NAICS 72) with less than 500-employeeson a per physical location basis, and, if operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply. The Small Business Administration gains a substantial funding increase and has added new flexibility for its 7 (a) loan program and sees the creation of new programs to meet small businesses needs during COVID 19.

Gaining small business financing tied to COVID 19 involves first understanding what new regulatory and funding changes the federal Stimulus legislation provided. First, let’s look at the substantial enhancements to several SBA programs made by the federal Stimulus legislation.

 

Economic Injury Disaster Loans (EIDL).  The EIDL SBA program provides up to $2 M per borrower in working capital loans for small businesses and requires small businesses must meet a list of size standards which vary per NAICS industry code.  The federal Stimulus legislation does the following related to the EIDL program:

Funding Allocation. Provides $10 B for EIDL emergency grants;

Eligibility. Expands eligibility for access to EIDL to include Tribal businesses, cooperatives, and ESOPs with fewer than 500 employees or any individual operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020), and private non-profits are also eligible for both grants and EIDLs.

Loan Terms.  Requires that for any SBA EIDL loans made in response to COVID-19 before December 31, 2020, the SBA shall waive any personal guarantee on advances and loans below $200,000, the requirement that an applicant needs to have been in business for the 1-year period before the disaster, and the credit elsewhere requirement. 

Loan Approval Criteria.  During the covered period, allows SBA to approve and offer EIDL loans based solely on an applicant’s credit score, or use an alternative appropriate alternative method for determining applicant’s ability to repay. 

Emergency EIDL Grant. Establishes an Emergency Grant to allow an eligible entity who has applied for an EIDL loan due to COVID-19 to request an advance on that loan, of not more than $10,000, which the SBA must distribute within 3 days, establishes that applicants shall not be required to repay advance payments, even if subsequently denied for an EIDL loan, in advance of disbursing the advance payment, the SBA must verify that the entity is an eligible applicant for an EIDL loan, this approval shall take the form of a certification under penalty of perjury by the applicant that they are eligible, outlines that advance payment may be used for providing paid sick leave to employees, maintaining payroll, meeting increased costs to obtain materials, making rent or mortgage payments, and repaying obligations that cannot be met due to revenue losses, requires that an advance payment be considered when determining loan forgiveness, if the applicant transfers into a loan made under SBA’s Paycheck Protection Program, and terminates the authority to carry out Emergency EIDL Grants on December 30, 2020.

Authority. establishes that an emergency involving Federal primary responsibility determined to exist by the President under Section 501(b) of the Stafford Disaster Relief and Emergency Assistance Act qualifies as a new trigger for EIDL loans and, in such circumstances, the SBA Administrator shall deem that each State or subdivision has sufficient economic damage to small business concerns to qualify for assistance under this paragraph and the Administrator shall accept applications for such assistance immediately. Adds “emergency” explicitly into other existing EIDL trigger language under Section 7(b)(2) of the Small Business Act.

 

Paycheck Protection Program (PPP).  Makes temporary changes to the SBA 7(a) loan program by creating a new subset of 7(a) loans called Paycheck Protection Program loans. This program provides lenders 100% loan guarantees for loans of up to $10 M per small business for payroll losses and select working capital costs. While administered by SBA, loans are issued by private lenders. Under PPP, small businesses are defined as having less than 500 employees or meet SBA NAICS code size standards. The Federal stimulus includes the following provisions for PPP loans: 

Funding. Provides $349 B in new funding for the 7(a) Program through December 31, 2020;

Loan Terms. Increases the government guarantee of all 7(a) loans to 100 percent through December 31, 2020 after which point the guaranty percent will return to 75 percent for loans exceeding $150,000 and 85 percent for loans equal to or less than $150,000, and establishes the maximum loan size as equivalent to 250 percent of the employer’s average monthly payroll costs (e.g., roughly 10 weeks of payroll expenses) or $10 M, whichever is less through December 31, 2020, provides a limitation on a borrower from receiving this assistance and an economic injury disaster loan through SBA for the same purpose; however, it allows a borrower who has an EIDL loan unrelated to COVID-19 to apply for a PPP loan, with an option to refinance that loan into the PPP loan but the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven under the Paycheck Protection Program, requires eligible borrowers to make a good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19, they will use the funds to retain workers and maintain payroll, lease, and utility payments; and are not receiving duplicative funds for the same uses from another SBA program, waives both borrower and lender fees for participation in the Paycheck Protection Program and the credit elsewhere test for funds provided under this program, collateral and personal guarantee requirements under this program, outlines the treatment of any portion of a loan that is not used for forgiveness purposes and the remaining loan balance will have a maturity of not more than 10 years, and the guarantee for that portion of the loan will remain intact, sets a maximum interest rate of four percent, ensures borrowers are not charged any prepayment fees, allows complete deferment of 7(a) loan payments for at least six months and not more than a year, and requires SBA to disseminate guidance to lenders on this deferment process within 30 days, increases the maximum loan for an SBA Express loan from $350,000 to $1 M through December 31, 2020, after which point the Express loan will have a maximum of $350,000; and requires veteran’s fee waivers for the 7(a) Express loan program to be permanently waived.

Eligibility. Available for small businesses and nonprofits with fewer than 500 employees with one or more location, below a gross annual receipts threshold in certain industries, waves affiliation rules for businesses in the hospitality and restaurant industries, franchises that are approved on the SBA’s Franchise Directory, and small businesses that receive financing through the Small Business Investment Company (SBIC) program for a covered loan period as beginning on February 15, 2020 and ending on June 30, 2020, for eligibility purposes, requires lenders to, instead of determining repayment ability, which is not possible during this crisis, to determine whether a business was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or a paid independent contractor;

Loan Uses.  Specifies allowable uses of the loan include payroll support, such as employee salaries, paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments;

SBA 7 (a) Lenders. provides delegated authority, which is the ability for lenders to make determinations on borrower eligibility and creditworthiness without going through all of SBA’s channels, to all current 7(a) lenders who make these loans to small businesses, and provides that same authority to lenders who join the program and make these loans;

 

PPP Loan Forgiveness.  The principal amount of a PPP loan will be eligible for forgiveness (subject to submission of proper documentation) up to an amount equal to the total of the following costs incurred and/or payments made during the eight-week period following the origination of the loan.  

Funding.  Provides $ 100 B for secondary market loan guarantees

Eligibility. Establishes that the borrower shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020;

Loan Forgiveness Terms. Amounts forgiven may not exceed the principal amount of the loan, eligible payroll costs do not include compensation above $100,000 in wages, forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8-week period compared to the previous year or time period, proportionate to maintaining employees and wages: 

⦁ Payroll costs plus any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation + and any covered utility payment; 

⦁ The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation;

⦁ To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period;

⦁ Allows forgiveness for additional wages paid to tipped workers;

⦁ Borrowers will verify through documentation to lenders their payments during the period. Lenders that receive the required documentation will not be subject to an enforcement action or penalties by the Administrator relating to loan forgiveness for eligible uses;

⦁ Upon a lender’s report of an expected loan forgiveness amount for a loan or pool of loans, the SBA will purchase such amount of the loan from the lender;

⦁ Canceled indebtedness resulting from this section will not be included in the borrower’s taxable income; and

⦁ Any loan amounts not forgiven at the end of one year is carried forward as an ongoing loan with terms of a max of 10 years, at max 4% interest and the 100% loan guarantee remains intact.

 

Subsidy for Certain SBA Loan Payments.  A special loan subsidy is provided for covered SBA loans to include existing 7(a) (including Community Advantage), 504, or microloan products. 

Funding. Provides $17 B for loan subsidies; 

Loan Subsidy Terms. Requires the SBA to pay the principal, interest, and any associated fees that are owed on the covered loans for a six-month period starting on the next payment due, loans that are already on deferment will receive six months of payment by the SBA beginning with the first payment after the deferral period, and loans made up until six months after enactment will also receive a full 6 months of loan payments by the SBA. SBA must make payments no later than 30 days after the date on which the first payment is due, requires the SBA to still make payments even if the loan was sold on the secondary market; and requires SBA to encourage lenders to provide deferments and allows lenders, up until one year after enactment, to extend the maturity of SBA loans in deferment beyond existing statutory limits.

 

No matter where the money comes from, the Montrose Group advocates for small business financing through a quick four step process.  

 

Business Plan Review.  First, a company’s business plan from a strategy and financial standpoint is reviewed to understand its basic market fundamentals and how the company achieves is sustainable competitive advantage. The business plan review includes:

⦁ Review of business strategy and financial analysis of company’s existing business plan;

⦁ Review of annual financial reports to identify cost and revenue centers; and

⦁ Identification of business development strategies to identify company’s ideal customer.

 

Financing Options.  Following the review of a company’s business plan, next financing options are reviewed that best fit the short and long term needs of the organization. The majority of small businesses are eligible for SBA and other government loan programs, but the SBA program excludes companies in the gambling, lending, life insurance, religious teaching, primarily political and lobbying activities, oil wildcatting, mining, mortgage servicing, real estate development, bail bond, pawn or private clubs industries. Steps in the review of financing options include: 

⦁ Determining the size of the company and industry focus;

⦁ Understanding the company’s financial needs such as whether they are for working capital or fixed assets; and

⦁ Mapping out private banking options as well as state and federal government program options and comparing the financing sizes and the cost of capital.

 

Financing Applications. Whether the financing is from a private or public source, a small business is going to need to file an application to request the financing.  A list of documents and materials will be needed to file this application that includes:

⦁ Business financial statements to include three years of annual profit & loss statements, year-end balance sheet including a debt schedule, reconciliation of net worth, interim balance sheet, interim profit & loss statements, projected financial statements that include month to month cash flow projections, for at least a one-year period;

⦁ Business certificated and/or license;

⦁ Loan application history;

⦁ Income tax returns for the previous three years;

⦁ Resumes for each principal in the company;

⦁ Business overview and history including an explanation of why the SBA loan is needed and how it will help the business; and

⦁ Business facility lease.

 

Financing Advocacy

Finally, COVID 19 will flood both private and public sources of small business financing with applications.  Firms like the Montrose Group will become not just business advisors but advocates with those financing sources to push for quick financing for the small businesses impacted by COVID 19 and, often, in need of this financing to have a business left when the current public health scare subsides.  

 

Contact Jamie Beier Grant at jbgrant@montrosegroupllc.com at the Montrose Group if you have a question about small business or nonprofit financing. 

 

Federal Stimulus Package to Support Large Company Survival During COVID 19 

 

The $2 T federal stimulus package provides $500 B for the U.S. Treasury Department to backstop through its Exchange Stabilization Fund two loan programs of the Federal Reserve Bank being used to support large companies.  Millions of unemployed and concerns with gathering in airports, car dealers and other business are going to lead to a double-digit decline in the U.S. Gross Domestic Product and a major destabilization of many of America’s largest companies. The Federal Reserve Bank’s 13(3) lending is a critical tool that can be used in times of crisis to help mitigate extraordinary pressure in financial markets that would otherwise have severe adverse consequences for households, businesses, and the U.S. economy.

 

To address this large company destabilization, the Federal Reserve Bank on March 23, 2020 established two new organizations to support highly rated U.S. corporations. The Primary Market Corporate Credit Facility (PMCCF) allows the Fed to lend directly to corporations by buying new bond issuances and providing loans. $10 B in initial funding was provided to the PMCCF.  The PMCCF will purchase eligible corporate bonds directly from eligible issuers and will make eligible loans to eligible issuers Borrowers must be U.S. headquarters companies may defer interest and principal payments for at least the first six months so that they have cash to pay employees and suppliers. But during this period, borrowers may not pay dividends or buy back stocks. The maximum amount of outstanding bonds or loans of an eligible issuer that borrows from the Facility may not exceed the applicable percentage of the issuer’s maximum outstanding bonds and loans on any day between March 22, 2019 and March 22, 2020: 140 percent for eligible assets/eligible issuers with a AAA/Aaa rating from a major NRSRO; 130 percent for eligible assets/eligible issuers with a AA/Aa rating from a major NRSRO; 120 percent for eligible assets/eligible issuers with a A/A rating from a major NRSRO; or 110 percent for eligible assets/eligible issuers with a BBB/Baa rating from a major NRSRO.  The PMCCF will purchase bonds and make loans that have interest rates informed by market conditions. At the borrower’s election, all or a portion of the interest due and payable on each interest payment date may be payable in kind for 6 months, extendable at the discretion of the Board of Governors of the Federal Reserve System. Such interest amount will be added to, and made part of, the outstanding principal amount of the bond or loan. A borrower that makes this election may not pay dividends or make stock buybacks during the period it is not paying interest.   The commitment fee will be set at 100 bps, and bonds and loans under the Facility are callable by the eligible issuer at any time at par.  Finally, the PMCCF will cease purchasing eligible corporate bonds or extending loans on September 30, 2020, unless the Facility is extended by the Board of Governors of the Federal Reserve System. The Reserve Bank will continue to fund the Facility after such date until the Facility’s underlying assets mature.

 

Also, the Federal Reserve Bank created the Secondary Market Corporate Credit Facility (“SMCC”), the Federal Reserve Bank of New York (“Reserve Bank”) to lend, on a recourse basis, to a special purpose vehicle (“SPV”) that will purchase in the secondary market corporate debt issued by eligible issuers. The SPV will purchase eligible individual corporate bonds as well as eligible corporate bond portfolios in the form of exchange traded funds (“ETFs”) in the secondary market. The Reserve Bank will be secured by all the assets of the SPV. The SMCC may purchase corporate bonds that meet each of the following criteria at the time of purchase by the SMCC:  issued by an eligible issuer; rated at least BBB-/Baa3 by a major nationally recognized statistical rating organization (“NRSRO”) and, if rated by multiple major NRSROs, rated at least BBB-/Baa3 by two or more NRSROs, in each case subject to review by the Federal Reserve; and have a remaining maturity of five years or less.   The SMCC also may purchase U.S.-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. investment grade corporate bonds.   Eligible issuers for direct purchases of individual corporate bonds on the secondary market are U.S. businesses with material operations in the United States. Eligible issuers do not include companies that are expected to receive direct financial assistance under pending federal legislation.   The maximum amount of bonds that the SMCC will purchase from any eligible issuer will be capped at 10 percent of the issuer’s maximum bonds outstanding on any day between March 22, 2019 and March 22, 2020. The facility will not purchase more than 20 percent of the assets of any ETF as of March 22, 2020.  The SMCC will purchase eligible corporate bonds at fair market value in the secondary market, avoid purchasing shares of eligible ETFs when they trade at prices that materially exceed the estimated net asset value of the underlying portfolio, and cease purchasing eligible corporate bonds and eligible ETFs no later than September 30, 2020, unless the Facility is extended by the Board of Governors of the Federal Reserve System. 

 

The additional federal funding for the Federal Reserve lending programs from the Congress did not come without some strings.  The federal stimulus legislation produced program rules that must be following and made the following program funding and policy restrictions:

⦁ Provides $500 B to Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees, and other investments, distributed as follows:

⦁ Direct lending, including:

⦁ $25 B for passenger air carriers, eligible businesses that are certified under part 145 of title 15, Code of Federal Regulations, and approved to perform inspection, repair, replace, or overhaul services, and ticket agents;

⦁ $4 B for cargo air carriers; and

⦁ $17 B for businesses important to maintaining national security.

⦁ $454 B, as well as any amounts available but not used for direct lending, for loans, loan guarantees, and investments in support of the Federal Reserve’s lending facilities to eligible businesses, states, and municipalities. 

⦁ All direct lending must meet the following criteria:

⦁ Alternative financing is not reasonably available to the business;

⦁ The loan is sufficiently secured or made at an interest rate that reflects the risk of the loan and, if possible, not less than an interest rate based on market conditions for comparable obligations before the coronavirus outbreak;

⦁ The duration of the loan shall be as short as possible and shall not exceed 5 years;

⦁ Borrowers and their affiliates cannot engage in stock buybacks, unless contractually obligated, or pay dividends until the loan is no longer outstanding or one year after the date of the loan;

⦁ Borrowers must, until September 30, 2020, maintain its employment levels as of March 24, 2020, to the extent practicable, and retain no less than 90 percent of its employees as of that date;

⦁ A borrower must certify that it is a U.S.-domiciled business and its employees are predominantly located in the U.S.;

⦁ The loan cannot be forgiven; and

⦁ In the case of borrowers critical to national security, their operations are jeopardized by losses related to the coronavirus pandemic.

⦁ Any lending through a 13(3) facility established by the Federal Reserve under this Section must be broad-based, with verification that each participant is not insolvent and is unable to obtain adequate financing elsewhere. 

⦁ Loan forgiveness is not permissible in any such credit facility.

⦁ Treasury will endeavor to implement a special 13(3) facility through the Federal Reserve targeted specifically at nonprofit organizations and businesses between 500 and 10,000 employees, subject to additional loan criteria and obligations on the recipient, such as:

⦁ The funds received must be used to retain at least 90 percent of the recipient’s workforce, with full compensation and benefits, through September 30, 2020;

⦁ The recipient will not outsource or offshore jobs for the term of the loan plus an additional two years;

⦁ The recipient will not abrogate existing collective bargaining agreements for the term of the loan plus an additional two years; and

⦁ The recipient must remain neutral in any union organizing effort for the term of the loan.

⦁ Prohibits recipients of any direct lending authorized by this Title from increasing the compensation of any officer or employee whose total compensation exceeds $425,000, or from offering such employees severance pay or other benefits upon termination of employment which exceeds twice the maximum total annual compensation received by that employee, until one year after the loan is no longer outstanding. 

⦁ Officers or employees making over $3 M last year would also be prohibited from earning more than $3 M plus fifty percent of the amount their compensation last year exceeded $3 M.

 

COVID 19 is pushing traditionally conservative institutions to take radical steps.  The Federal Reserve loan programs are just one of those steps the federal government is taking to address the COVID 19 driven economic slowdown. 

 

Contact David Robinson at drobinson@montrosegroupllc.com of the Montrose Group if you need assistance with these Federal Reserve Bank loan programs. 

 

Federal Stimulus Bolsters EDA’s Economic Adjustment Assistance Program – What can this do for your community? 

 

The U.S. Department of Commerce’s Economic Development Administration (EDA) is traditionally at the point of the spear for the federal government related to economic development program.  The recently Congress recently provided the EDA with $1.5 B in supplemental funding for the Economic Adjustment Assistance program, of which 2% is carved out to support ‘salaries and expenses’ expected from a surge of requests for funding.

 

The EDA’s Economic Adjustment Assistance (EAA) program is designed to offer a wide range of technical, planning, and public works and infrastructure assistance in regions experiencing adverse economic changes that occur suddenly or over time. With the recent onset of the COVID-19 pandemic, almost every community in the United States is experiencing sudden and adverse economic change.

 

Economic Adjustment Assistance funding can provide invaluable support to your economic development efforts:

 

Strategy Grants – supports the development, updating or refinement of a Comprehensive Economic Development Strategy (CEDS). As a community, having a CEDS in place is a prerequisite for qualifying for EDA funds for projects. Some questions to ask about a CEDS:

⦁ If you have a CEDS in place, how has the COVID-19 crisis impacted priorities in your current strategy?  Does your strategy need to be updated or refined?

⦁ If you do not have a CEDS in place, should you have one? A strategy grant will help fund developing your strategy.

 

Implementation Grants – supports the execution of activities identified in a CEDS. What strategic priorities are listed within your CEDS that will prepare your community for future economic development success?

⦁ CEDS strategies around infrastructure improvements, including site acquisition, site preparation, construction, rehabilitation and equipping of facilities can be funded through implementation grants.

⦁ Specific strategies within a CEDS can be funded, as can multiple elements of a single investment (think establishing a new industrial park where land acquisition and extension of public infrastructure are necessary).

 

The EAA program is EDA’s most flexible program. Under the EAA program, EDA can fund market and environmental studies, planning or construction grants, and seed or replenish revolving loan funds (RLFs) to provide small businesses with capital needs. 

 

Project Competitiveness Perspective. In these trying times, focusing on priorities like creating a CEDS or catalyzing a priority within an existing CEDS elevates a community’s competitiveness in receiving EDA funding. To position your community’s projects competitively for EDA EAA funding, prioritize projects that are positioned to start quickly and create jobs faster; look at how the project will enable your community/region to become more diversified and economically balanced; and relieves economic distress of your community/region.

 

One catalytic success story that was awarded EAA program funds was to aide a community impacted by the decline of its primary economic driver, its energy-producing sector. Using EAA funding, the community developed a strategy to accelerate the region’s transition out of the coal economy via entrepreneurial growth, workforce development, cluster expansion, Opportunity Zone enhancement, and prioritizing infrastructure investment needs to access local, national and global markets. The results of this strategy will diversify the economy and create new opportunities for entrepreneurs and manufacturers.

 

Almost any community across the country can argue that EDA Economic Adjustment Assistance funding would be key to raising businesses and employees up out of economic adversity. The Montrose team has extensive experience in strategic planning, Opportunity Zone utilization and building financial structures to fund economic development priority projects. Let us help your community access EDA’s expanded Economic Adjustment Assistance program to catalyze your most needed projects.

 

Contact Nate Green at ngreen@montrosegroupllc.com or Jamie Beier Grant at jbgrant@montrosegroupllc.com at the Montrose Group if you have an interest in gaining access to EDA funding or for other economic development efforts. 

 

Federal Stimulus Legislation Bolsters CDBG Funding and Requirements Modified to Support Small Business & Community Needs

 

The Department of Housing and Urban Development Community Development Block Grant (CDBG) program addresses community development efforts all over the United States.  The federal Stimulus legislation dramatically increased CDBG funding and added flexibility to program rules to support small business and community’s impacted by COVID 19.

 

CDBG funds are directed to community development activities that build stronger and more resilient communities. Overarching CDBG priorities include activities that address infrastructure, economic development projects, public facilities installations, community centers, housing rehabilitation, public services, microenterprise assistance. Meeting at least one of the CDBG national objectives remains a requirement when requesting funding – employing at least 51% low- to moderate-income persons, eliminating slum and blight, or meet an “urgent” need. 

 

As a part of the federal stimulus package, the CDBG program will receive $5 B in supplemental funding, with $2 B being distributed according to 2020 allocation formulas in the next 30 days and $1 B being distributed to states to combat the spread of COVID-19 within 45 days. The balance of $2 B will be distributed to states according to economic and housing disruptions. The Secretary of HUD will determine the formula for distributing the balance of funds to states. 

 

According to the Congressional Research Service, some localities in the U.S. have announced efforts to support community services (public transit in Augusta, GA) and small business support ($10,000 grants to small businesses in Seattle, WA impacted by COVID-19 outbreak) with CDBG funds. Other states and communities are looking to reprogram funding uses as part of long-term social welfare and economic development recovery efforts. 

 

In Ohio, the Office of Community Development within the Ohio Development Services Agency has issued modifications to programming while Ohio is in a State of Emergency status, including:

⦁ 0% interest loans

⦁ Removing the 30% cap of program income received in one-year requirement for working capital loan requests

⦁ Working capital loans also will not require accompanying fixed-asset investment

⦁ Deferred principal and interest for new and existing loans for up to 6 months with a 6-month renewal option as deemed appropriate and document by local RLF boards, and

⦁ Applicant businesses may use current economic conditions to evidence that Ohio will imminently lose jobs to support a job retention claim.

 

Why CDBG is a Tool that should be in you Economic Development Toolbox 

The CDBG program can be of great economic development benefit to a community in two ways – as a tool for public infrastructure improvements and as a gap financing solution for higher risk small business projects. Typically, CDBG funds can come in to support up to 50% of a project’s costs. The CDBG framework for determining qualifying funding is:

⦁ Fund up to 50% of total project costs, not to exceed $500,000

⦁ Up to $10,000 can be granted or loaned for every one full-time equivalent job created or retained as a result of the project

⦁ Public infrastructure projects (e.g., water, sewer, roads) are eligible for up to 50% CDBG grant funding, not to exceed $500,000, towards project

⦁ Private, for-profit projects can qualify for up to 50% CDBG low-interest loans, not toe exceed $500,000 towards project

 

Communities who have an eligible investment project can apply for funding from the state’s CDBG allocation. If approved, the state provides the CDBG funding to the local community who then invests the money into the project. If a CDBG loan is being issued by the state, the state grants that money to the community and the community then lends it to the business. The business then repays the loan to the local community, creating a local CDBG Revolving Loan Fund. These local CDBG RLF funds can then be continually reinvested into other economic development projects.

 

At the federal level, the CDBG stimulus-funded program has placed an emphasis on activities to support infectious disease response at the local level. An overview of eligible economic development uses to support infectious disease response includes:

 

Buildings and improvements, including public facilities, for testing, diagnosis or treatment demands. Rehabilitating a commercial building or closed school building are two examples of spaces that could be converted into infectious disease facilities.

 

Special Economic Development Assistance to provide loans or grants to private, for-profit entities that carry out an economic development project, including: 

⦁ Grants or loans to support new businesses and business expansion that creates jobs and manufactures medical supplies necessary to the infectious disease response.

⦁ To avoid job loss caused by business closures related to social distancing by providing short-term working capital assistance that retains jobs held by low- and moderate-income persons.

⦁ Microenterprise assistance for technical assistance, grants, loans and other financial assistance to establish, stabilize, and expand microenterprises that provide medical, food deliver, cleaning, and other services to support home health quarantine.

 

For a complete list of CDBG stimulus-eligible activities related to the infectious disease response, visit: https://files.hudexchange.info/resources/documents/Quick-Guide-CDBG-Infectious-Disease-Response.pdf

 

Now is the time to look at community catalytic projects that could use CDBG funds to help with public infrastructure improvements or finance private sector projects and create a local RLF program for your economic development efforts. The Montrose team can help determine financing structures and programs to utilize and help package the applications for your community. 

 

Contact Jamie Beier Grant at jbgrant@montrosegroupllc.com at the Montrose Group if you have an interest in gaining access to EDA funding or for other economic development efforts. 

Federal Stimulus Pumps Funding into USDA to Support Rural Economy

 

Through the $2.2 Trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the U.S. Department of Agriculture (USDA) will receive funding across many of its most vital programs to support the agriculture industry sector and rural America. Overall, the bill will send roughly $48.9 Billion to the USDA, which does not include added funding for the Food and Drug Administration. 

 

The USDA’s Rural Development programs will receive a total of $145.5 Million to fund programs designed to advance rural Americans access to lending and technology. A breakdown in USDA’s Rural Development funding includes:

⦁ $20.5 Million for the Rural Business-Cooperative Service, adding $1 Billion in lending authority

⦁ $100 Million in grants for Rural Broadband Service, and

⦁ $25 Million for Distance Learning and Telemedicine Programs

 

Rural Business-Cooperative Service – $20.5 Million & $1 Billion Lending Authority

The Rural Business-Cooperative Service offers programs to help businesses grow and help people living in rural areas with access to job training. The Business-Cooperative Service functions are expansive and help with anything from providing capital to training, education and entrepreneurial skills to help those living in rural areas start and grow businesses or find jobs in the agricultural/bio-energy markets.

Business Programs – financing provided in partnership with private-sector lenders and community-based organizations in the form of loan guarantees, direct loans, or grants to individuals, businesses, cooperatives, farmers and ranchers, public bodies, nonprofit corporations, Native American tribes and private companies.

Cooperative Programs – promote the use of cooperative forms of business for services such as shipping agricultural products and supplies and provide other services such as electricity, broadband connectivity, phone, internet, banking services, housing, food, hardware and building supplies.

Community Economic Development – programs and technical help for rural cities and areas to realize their strategic, long-term economic development goals.

Energy Programs – provide loans and grants to help finance the cost of renewable energy systems and energy efficiency improvements for rural small businesses and agricultural producers. Grants cover up to 25% of eligible project costs and commercial loan guarantees of up to 85% are available.

 

Rural Broadband Service – $100 Million

According to the Federal Communications Commission and USDA, 80% of the 24 million American households that do not have reliable, affordable high-speed internet are located in rural areas. The USDA has been investing more than $700 Million a year for modern broadband e-Connectivity in rural communities and with stimulus funding will see another $100 Million in grant funding to support e-Connectivity through its programs. 

e-Connectivity priorities of the USDA are aimed at increased productivity that fosters economic development, job growth, rural entrepreneurship and innovative technologies where every part of rural America, including the farm, is connected to the web; improved operations where connectivity helps farmers enhance real-time activity of operations in the fields, manages finances, and responds to real-time international market conditions; enhanced healthcare options to bring remote access to all forms of healthcare services, like proper prescription medication submissions, distance learning and training for addiction services and treatment counseling, and telehealth visits; educational opportunities so rural students have the same digital learning tools and WiFi hotspots as their peers; and competitive entrepreneurship that opens the global digital marketplace up for rural e-commerce products.

 

Rural Development Broadband ReConnect Loan and Grant Program – awards loans and grants to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas that do not have access to at least 10 Mbps downstream and 1 Mbps upstream. 

⦁ 100% Grant – up to $25,000,000 max grant request

⦁ 50% Loan / 50% Grant – up to $25,000,000 loan and $25,000,000 grant request and loan/grant requests will always be equal

⦁ 100% Loan – up to $50,000,000 max loan request

⦁ Eligible Applicants – cooperatives, non-profits, or mutual associations; for-profit corporations or LLCs; state or local governments, or any agency, subdivision, instrumentality, or political subdivision thereof; territory or possession of the United States; or an Indian tribe 

 

Distance Learning and Telemedicine Program – $25 Million

The Distance Learning and Telemedicine program helps rural communities use the unique capabilities of telecommunications to connect each other and to the world, overcoming the effects of remoteness and low population density. Most state and local government entities, as well as federally-recognized Tribes, non-profits, for-profit businesses, and consortias of eligible entities may apply for grant funds so long as the applicants provide education or health care through telecommunications.

 

DLT 100% Grants require a minimum 15% match from the applicant.

⦁ Award range: $50,000 – $1,000,000

⦁ Eligible uses: acquisition of eligible capital assets (broadband transmission facilities; audio, video and interactive video equipment; terminal and data equipment; computer hardware, network components and software; inside wiring and similar infrastructure that further DLT services); acquisition of instructional programming for eligible equipment; acquisition of technical assistance and instruction for using eligible equipment

 

Finally, it is important to note the CARES Act recognized Agriculture as an industry in need of aid, as a result of fallout from COVID-19. The Commodity Credit Corporation will receive $14 Billion more in funding authority for crafting aid packages through the commodity and income support program, to farmers who have seen commodity prices crash since the COVID-19 pandemic was declared. The Commodity Credit Corporation is a wholly-owned Government corporation with primary program authority for commodity and income support, natural resources conservation, export promotion, international food aid, disaster assistance, agricultural research, and bioenergy development. Farmers who sell directly to farmers markets, schools and restaurants would also be eligible for aid.

 

Please contact Jamie Beier Grant at jbgrant@montrosegroupllc.com at the Montrose Group if you need assistance with gaining funding from the USDA or other government programs.