InvestNOLA COVID Relief Loan Fund
Project Overview
The City of New Orleans has committed $2M to fund an alternative loan assistance program
to support the sustainability of local micro-businesses during and beyond the COVID-19 pandemic and other recent disasters. The members of the InvestNOLA CDFI Consortium provided additional funding to ensure more businesses receive monetary aid that is necessary to help small business owners survive the hardships presented by the COVID-19 pandemic.
Congress passed the $349B CARES law which included the Paycheck Protection Program (PPP) during March 2020. The program began accepting applications on April 3 and was fully subscribed by April 17.
As a result, many small businesses were left unfunded and unserved
by the program, which necessitated Congress appropriating $310B of additional funding and earmarking >$30B for Community Development Financial Institutions (CDFI).
While more minority-owned, small, and micro businesses received funding in phase 2 of the PPP program, many did not.
The complex design and numerous program changes during the implementation of the PPP made it difficult for many micro-businesses to take advantage of it.
As designed, the PPP loans were best suited for the hyper-prepared business entity with well-documented payroll costs and access to professional staff and/or consultants that could quickly prepare applications for funding. In short, the roll-out of the PPP rewarded businesses that were well prepared before the pandemic and left out those that could not respond to the application within a one (1) week time frame. Thus, beyond the program’s application requirements,
the speed at which applicants were required to respond left many smaller businesses out of the loop.
Many of those micro-businesses are clients of the members of the New Orleans Business Alliance (NOLABA’s) InvestNOLA Initiative’s CDFI Growth Capital Consortium – Liftfund, Newcorp, and Trufund Financial. They may require intensive application intake assistance and more time to amass required documentation. More importantly, their most pressing financial needs may not be consistent with the PPP or other federal loan funding guidelines. In other words, payroll may not be the most urgent financial need.
For that reason, the City of New Orleans, the NOLABA, and the InvestNOLA CDFI Growth Capital Consortium partnered to commence the InvestNOLA COVID-19 Relief Loan Fund. The fund will provide
loans between $10 and $50K at 6% APR with loan terms up to five and half years. The first six months of payments will be deferred, and the final 10% of the principal loan amount may be forgiven at the end of the loan term.
