State officials created a small business loan program and seeded the fund with $50 million for companies with fewer than 100 employees impacted by the coronavirus pandemic.
The Louisiana Loan Portfolio Guaranty Program is slated to offer loans up to $100,000, with interest rates of no more than 3.5%, and no payments for at least 180 days. The loan term can be up to five years.
The program will be overseen by the Louisiana Economic Development department and administered by the Louisiana Public Facilities Authority.
Members of the Louisiana Bankers Association are permitted to underwrite the loans and more than 30 banks across the state have agreed to participate in the program so far.
The loans are meant for companies to use for payroll, pay rent or mortgages and utilities. The goal is not for the program to compete with either the U.S. Small Business Administration's disaster loans or the paycheck protection loans but rather be in addition to those loans.
"We are not competing with the essential financial products offered by the U.S. Small Business Administration, we are complementing SBA,” said LED Secretary Don Pierson.
The state expects to list all participating banks and their respective agreements on its website by Friday.
“Louisiana banks play an important role in economic activity and continue to do so during disaster recovery,” said Robert Taylor, CEO of the Louisiana Bankers Association.
Funding would be a boost to small business owners in Acadiana, many of which have furloughed workers or suspended operations, One Acadiana president and CEO Troy Wayman said.
“The LPGP meets a critical need to help small businesses stabilize during this crisis,” Wayman said. “This is an incredibly useful resource to help business owners keep their workforce in place and maintain business continuity.”
Banks across the state have already requested loans for about two-thirds of the $50 million allocated for the program. Other lenders interested in the program should contact LED.
Support from the banking industry at this point is pivotal, said Anita Begnaud, CEO of the Downtown Development Authority. Most downtown Lafayette businesses employ less than 100 people, and more than half of restaurants downtown have been forced to close.
"The buy-in from the local banking community is important," she said. "And the banking community is critically important to the recovery effort that we’re going to see in Louisiana. I am excited and proud that the state is stepping up. I am looking forward to digging deeper into this and sharing with business owners downtown who are already feeling the impacts of this."
Gaming businesses, churches, nonprofits, real estate developers, pawn shops and payday lenders are not eligible for the program. Applications will be accepted by banks until April 30.
"Access to funding for Louisiana businesses is a priority, and by working with our Louisiana banking community we can make loan decisions here in Louisiana. This state guaranty program will leverage available funds and enhance eligibility,” said President and CEO James W. Parks II of the Louisiana Public Facilities Authority.
The Louisiana Public Facilities Authority is a self-supporting public trust and public corporation that issues taxable and tax-exempt bonds to finance projects throughout the state. LPFA typically finances industrial and economic development projects; and provides low-cost funding for hospitals and hospital equipment, universities and other educational facilities, as well as programs for state and local governmental units.
Staff Writer Adam Daigle contributed to this report.
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