For small businesses in Chicago feeling the impact of the coronavirus, federal, state, city and county programs are available, offering grants, loans and other resources.
The red tape may seem daunting, and there have been some snarls at the federal level, but officials are working through the snags so it’s probably best to dive right in sooner rather than later with a bid to beat the competition to limited resources. Here’s a primer on the programs and what’s needed to land assistance.
Let’s start local. The city of Chicago has put $100 million toward the Small Business Resiliency Fund, making five-year loans of up to $50,000 for small businesses with a relatively low annual interest rate of 1 percent for the first 18 months and 5.75 percent thereafter, with minimal payments in the first six months.
Once the questions are answered, the applicant waits for the city’s lending partners to get in touch. Then, documentation becomes important. The single most important tip for being successful in landing a loan is to have in hand the few documents required, like the most recently filed tax return and bank statements for the business, says Patrick Davis, who works for Community Reinvestment Fund, one of the city’s lending partners helping administer the program.
He said via email today that he expects the first loan applications to start being approved today and anticipates most will be processed five to seven days from the time they are filed.
“To do our very best to provide the assistance, we have a large team at Accion that’s fielding questions, essentially hand-holding every applicant who gets through the initial approval,” said Davis, CRF’s vice president of program strategy and development.
The only catches are that half the loan has to be applied to the firm’s payroll expense and that the business has to keep at least half its employees for at least six months.
The state is making loans of up to $50,000 available through its Illinois Small Business Emergency Loan Fund, but that program is available only to businesses outside Chicago. Its terms resemble those of the Chicago program for the state’s other small-business owners.
The state also had $14 million available in a Hospitality Emergency Grant Program for bars and restaurants, but that program is now closed.
For its part, Cook County is trying to connect small-business owners, as well as contractors and nonprofits, directly with the federal programs put in place last month. It’s hosting a webinar on the topic April 8 and is partnering with other organizations, such as the Illinois Restaurant Association, to connect business owners to aid. It also has webinars directed at manufacturers and pointed businesses to the U.S. Chamber of Commerce guide for navigating the loan programs.
The federal Paycheck Protection Program is making $350 billion available through the Small Business Administration to provide larger loans of up to $10 million to businesses, nonprofits and contractors. Banks and other lenders participating in that program were able to start processing those loans April 3, but it’s gotten off to a rocky start.
“The rollout has been anything but smooth, with some banks beginning to process applications but others saying they were not ready,” according to Much Shelist, a law firm tracking the program’s progress.
Rules had to be clarified right off the bat, and the interest rate for the federal program was increased to 1 percent, from half a percent, to attract more bank participation. This program also is doling out money on a first-come, first-served basis.
The experience of one local digital publisher, John Lothian News, which covers the city’s derivatives trading industry, is telling. John Lothian, who heads the publisher, said he was stymied by the application process because his commercial lender isn’t participating in the program, so he considered setting up a new commercial account with his personal bank (which requires him to show up in person), but wouldn’t qualify that way because the federal program requires that accounts have been in place since February.
“The program would help us weather the storm that has disrupted our business,” Lothian told his readers in his daily email. “But the prospects for participating look long. And when and if I can finally apply, the money may have run out.”