Small Business Loan Program

Overview

• How are subrecipients compensated?

  Subrecipients are compensated on a cost reimbursement basis for costs associated with administering loans.

• Will funds be reallocated to other subrecipients at the end of the application period?

  Each subrecipient will be allocated the amount of funds outlined in the award letter. At the end of the application period, OCD will assess the number and amount of applications received by each subrecipient to determine if reallocations are necessary. There is a small reserve fund available to increase funding allocations, if necessary.

• Are subrecipients allowed to hire new employees to work on this program?

  The addition of new staff is allowed, however, the qualifications of existing staff to manage the program will be a part of the review process.  The proposed budget should include existing staff and any additional staff that would be hired. 

• Is there an advantage to having experience with other HUD programs?

  Given the nature of the funds, it would be considered an advantage to have knowledge of Community Development Block Grant (CDBG) fund requirements.

• Are there standard underwriting guidelines for the program?

  Yes. In addition to program eligibility requirements, basic underwriting guidelines that are to be used for this program are provided in the program guidelines. Each subrecipient is required to implement these basic underwriting guidelines. 

• Are there any pre-storm revenue or location requirements for loan applicants?

  A business must have been physically located in and currently open or planning to re-open in one of the disaster-declared parishes. A full list of these parishes is in the program guidelines. Additionally, businesses must have had a pre-storm gross annual revenue of at least $25,000 and must employ no more than 50 full-time equivalent (FTE) employees.

• What or who can substitute as a personal guarantee for non-profits?

  Any member(s) of the board of directors for the non-profit can sign a personal guarantee, assuming they possess adequate financial resources. In lieu of said personal guarantee(s), the non-profit can pledge any assets not currently obligated under other financial arrangements as a guarantee.

• Is there a program minimum credit score?

  Yes. The minimum credit score is 600. Subrecipients may request exceptions to this requirement to OCD on a case-by-case basis

• What is the maximum award amount?

  Loans may be provided up to a hundred and fifty thousand dollars ($150,000).

• How will subrecipients be notified of changes in program materials?

  All subrecipients will be sent an email notification that the document has been updated.

• Do declined loans need to be input in SAGE?

  Yes, all applicants, regardless of loan decision, will need to be input into the SAGE system.

• If an LLC is owned by two companies, how should the individual ownership information be entered into SAGE?

  The ownership of both companies should be entered in SAGE. The total ownership may exceed 100%.

• Are there specific loan terms for the program?

  Yes. The loan must be structured as 60% repayable and 40% forgivable. The interest rate is 0% with 60% of the loan amortized over seven (7) years, inclusive of the period of no principal repayment for the first six months. Loans placed in default carry a default interest rate of 8% from the date of the incident of default.  Other loan term requirements are provided in the program guidelines.

• Is the six-month no-payment period included in the seven-year term?

  The total term is seven years, including the six-month no-payment period. 

• Can applicants use funds to pay off SBA business loans?

  No. The funds should be used on eligible uses of funds listed in the guidelines.

• If an LLC is owned by two companies, how will the subrecipient determine who is required to sign the documents?

  All >20% owners of both businesses are required to sign. The total ownership percentage may exceed 100% on SAGE. An explanation should be kept on file.

• Does a Beacon Score have to be used for underwriting criteria, or can another comparable score be used?

  The Beacon Score is the standard measure and should be generally used.  In exceptional circumstances, if beacon score is not available, a comparable score must be used, with a full explanation in file.

• How do we determine who is required to sign documents for non-profits?

  Non-profit organizations should submit a board resolution identifying individuals who are authorized to sign on the company’s behalf.

• If a business has more than one location and only one is located in an eligible parish, is the business still eligible?

  A business can qualify as long as one location is in an eligible parish. The funds should be used on the location in the eligible parish. Eligibility is determined based on the total revenue of the company, based on the tax returns and is active, registered and in good standing with the Louisiana Secretary of State. For further details on eligibility, refer to the program guidelines. 

• A business has two locations in Louisiana, one in an affected parish and one in another parish. The affected parish location has not reopened; however, the business still services clients in the affected area? Can the business qualify?

  No. The business must have been physically located in one of the affected parishes both before and after the storm to qualify.

• Three individuals own equal shares of three separate businesses. Can they each apply for one of the businesses?

  No. It will take two owners to reach majority ownership, so they will qualify for only one loan.

• Can a business consider the use of cash reserves to sustain the business after the storm as a tangible loss?

  No. The business must have experienced an actual tangible loss of equipment, real estate, inventory, etc.

• What is a Socially & Economically Disadvantaged Individual (“SEDI”) owned business?

  SEDI is any of the following:

  1.      Business enterprises that certify that they are owned and controlled by individuals who have had their access to credit on reasonable terms diminished as compared to others in comparable economic circumstances, due to their (2) membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society; gender; (3) veteran status; (4) limited English proficiency; (5) physical handicap;(6) long-term residence in an environment isolated from the mainstream of American society; (7) membership of a federally or state-recognized Indian Tribe; (8) long-term residence in a rural community; (9) residence in a U.S. territory; (10) residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization); or (11) membership of another “underserved community” as defined in Executive Order 13985;

  2.      Business enterprises that certify that they are owned and controlled by individuals whose residences are in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii);

  3.      Business enterprises that certify that they will operate a location in a CDFI Investment Area, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); or

  4.      Business enterprises that are located in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii).

• How does a small business self-certify if they are a SEDI?

  A certification form will be provided upon the closing of each transaction. Businesses will be permitted to identify all the categories in item (1) to (3) that apply, including all of the subcategories in item (1) that apply. For item (1) no documentation or verification is needed. For items (2) or (3), the certification form must include the address of the primary residence or location in the CDFI Investment Area.

• What is a CDFI Investment Area?

  Per CDFI: A CDFI Investment Area is defined as a geographic unit (or contiguous geographic units), such as a census tract, located within the United States, that meets at least one of the following criteria:

  • Has a population poverty rate of at least 20 percent;

  • Has an unemployment rate 1.5 times the national average;

  • For a metropolitan area has a median family income (MFI) at or below 80 percent of the greater of either the metropolitan or national metropolitan MFI;

  • For a non-metropolitan area that has an MFI at or below 80 percent of the greater of either the statewide or national non-metropolitan MFI;

  • Is wholly located within an Empowerment Zone or Enterprise Community; or

  • Has a county population loss greater than or equal to 10 percent between the two most recent census periods for Metro areas or five percent over last five years for Non-Metro areas.

• How to determine CDFI Investment Area?

  Instructions:

  • Visit the CDFI Public Viewer at https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-cdfi/index.aspx#?center=-98.212,38.724&level=4&tool=result&visible=CT_2015_CDFI_ALL

  • Type in address of business

  • Under the address field, go to LAYERS and choose “2015 CDFI Tract – all”

  • If the address is shaded green, it is in a CDFI investment area

• Who should I contact to get additional information about the program?

  For more information, please email OCD.Economic_Development@la.gov.

• Will the state of Louisiana be doing any statewide advertising for this program?

  Subrecipients will be responsible for their own marketing.  It is the respondent’s responsibility to describe their outreach and marketing strategies in their proposal.

• Has it been determined (or estimated) when the application period will open and for how long?

  The application period has been extended to June 30, 2024.

• Page 6 Definitions includes a definition for Equipment. Is this definition and the $300 threshold applicable to our (SCPDC’s) procurement for the implementation of the program AND/OR is this definition applicable to a borrower’s “eligibility and award calculations”?

  The definition on page 6 referring to equipment is intended to describe the eligible equipment to applicants (small businesses).

• The NOFA states that a Board Resolution must be included with the application which is due on November 30 by 5:00 pm. With that being said, we have our Annual Board Meeting on December 15. Would it be acceptable to go ahead and submit the proposal without the Board Resolution and then send over the signed copy after the meeting on the December 15?

  Lenders can submit proposals without the resolution as long as prior notification of the scheduling delay is provided to OCD. Everything else still needs to be submitted by November 30.