State giving small businesses $225M to offset covid-19 losses

The state plans to provide $225 million in grants to small businesses that lost money during the government-ordered shutdowns from March through May and had to spend money to adapt their operations to prevent the spread of covid-19.

“The shutdown has had a terrible negative effect. We hope we can provide the liquidity the businesses need” to remain open, Gov. Tom Wolf said Monday in announcing the financial aid package funded through the federal CARES Act.

If the state did not provide funding for the small businesses, especially those that could not get money from the federal Paycheck Protection Program, people “will walk by empty windows” on Main Streets across the state, Wolf said.

Wolf said $200 million will be split by the Main Street and Historically Disadvantaged business revitalization programs. The money will be distributed through 17 community development financial institutions in the state, including the Northside Community Development Fund in Pittsburgh and The Progress Fund in Greensburg.

Keeping small businesses alive during the aftermath of the shutdowns is important to small towns, said David Kahley, president of The Progress Fund.

“They are critical in a very granular way in our communities,” Kahley said.

With two million small businesses in Pennsylvania, “I don’t think the demand (for the grants) is going to be small,” said Mark Masterson, executive director of the Northside Community Development Fund.

It is likely there will be a $50,000 maximum for most applicants, but most likely the average grant will be around $20,000 because small businesses are not carrying that much debt, Masterson said.

“Any point of relief is certainly appreciated. It is really a time of struggle for many small businesses,” said Gordon Denlinger, president of the 13,000-member Pennsylvania chapter of the National Federation of Independent Business.

Many small businesses lost a significant amount of revenue since March, including ones ordered to close and essential businesses that were highly limited by restrictions, Denlinger said.

The small businesses had to get grants rather than low-interest loans because “a loan doesn’t help a small business” that has suffered losses over the past two months, Masterson said.

Guidelines on the funding initiative will be released by the state Department of Community and Economic Development later this week, said Lyndsay Kensinger, a spokeswoman for Wolf.

“We’re still designing the airplane as it is running down the runway,” Kahley said.

Kahley does not anticipate the applications will be available until early July.

The state is rolling out the program differently than the federal Paycheck Protection Program was handled in April, Masterson said.

“We don’t want a first-come, first-served feeding frenzy,” Masterson said.

Another $25 million in grants will be distributed to community development lenders to cover clients’ deferred payments on business loans and to build up loan reserves.

Even with the government grants, Masterson said it will be a long time before small businesses can return to pre-covid days because of the prolonged loss of revenue.

“You’re not going to be back to normal for a year or two,” Masterson said.