As they await the next phases of Gov. Andy Beshear’s plan to reopen Kentucky’s economy after weeks of disruption due to the COVID-19 pandemic, small businesses in the 10-county region served by the Barren River Area Development District have another possible lifeline.
BRADD’s executive council last week approved a plan to offer a micro-loan program it calls the COVID-19 Business Relief Working Capital Loan Program to support local small businesses affected by the coronavirus response that has stymied state and national economic activity.
Using its existing U.S. Economic Development Administration Revolving Loan Fund, BRADD has allocated $100,000 in funding to be set aside for micro-loans ranging from $5,000 to $25,000 for meeting short-term working capital needs such as payroll, rent, utilities, supplies, inventory management and payments to suppliers.
Emily Hathcock, BRADD’s associate director for community and economic development, said these loans could be enough to help a small business weather the storm until business activity can start again.
“We know it’s not a whole lot of funding,” Hathcock said. “But if it can keep us from losing jobs, it’s worth it.”
BRADD will use a portion of its federal EDA funds to offer the micro-loans at an interest rate of 2.44 percent, and businesses may have payments deferred for up to six months. The loans are to be repaid over 36 months.
Steve Thurmond, chairman of the BRADD board of directors and executive director of the Franklin-Simpson Chamber of Commerce, emphasized the importance of small businesses to the region’s economy. He pointed out that small businesses in the BRADD region totaled more than $7.6 million in payroll and employed nearly 200,000 workers in 2017.
“Small businesses are the lifeblood of every community,” Thurmond said. “In towns like Franklin and even in Bowling Green, small businesses have a tough road even in good times.
“We’ve already seen some that won’t come back from this pandemic. They’ve been hit disproportionately hard. I hope in our 10-county area several businesses will take advantage of this.”
The loan program is similar to one initiated last month by the Owensboro-based Green River Area Development District. GRADD is utilizing $250,000 of its Revolving Loan Fund but will also be making loans of up to $25,000.
GRADD Executive Director Joanna Shake said the micro-loan program in the Owensboro area has resulted in $130,000 worth of loans being approved already.
BRADD Executive Director Eric Sexton said the micro-loans are a good use of the federal dollars and met the approval of EDA officials.
“We’ve had the revolving loan fund for at least a couple of decades,” Sexton said. “We currently have a balance that was just going to sit there under traditional rules. We decided to make it available to help small businesses.”
Sexton said BRADD has “simplified” the RLF loan process, with a shorter application and quicker approval timetable than normal.
“The program is very reasonable and accessible,” Sexton said. “The loans can be used for projects to help expand a business or keep it afloat.”
Many local small businesses – defined by the U.S. Small Business Administration as those with fewer than 500 employees – have either applied for or received loans through the Payroll Protection Program that was included in the federal Coronavirus Aid, Relief and Economic Security Act. But many others have not been able to tap into those federal funds, and Hathcock said they will receive preference under BRADD’s program.
A BRADD news release said priority points will be given to projects that serve rural areas with a population of 50,000 or less and to businesses that have not received prior federal assistance related to COVID-19.
Depending on the response to this initial pool of money, Sexton said the micro-loan program could be expanded.
“I can’t promise any funding beyond what’s earmarked,” Sexton said. “But we could be able to earmark another round. It’s all dependent on the (federal) EDA’s approval.”
– An application for the micro-loan program may be accessed at the BRADD.org website. Those with questions about the program may call BRADD at 270-781-2381.
– Follow business reporter Don Sergent on Twitter @BGDNbusiness or visit bgdailynews.com.