Small business owners in New York seeking additional relief from the coronavirus pandemic are in luck. The New York legislature and Gov. Andrew Cuomo recently enacted legislation to allow local Industrial Development Agencies (IDAs) to provide loans and grants related to COVID-19 relief. With other sources of funding like the Paycheck Protection Program often in question, it’s more important than ever for small business owners to tap state and local relief sources. So what does that mean for you, and can other states access similar funds?
What Is a New York IDA?
IDAs were established in New York in 1969 to “attract, retain and expand businesses within their jurisdictions through the provision of financial incentives to private entities,” according to a state review from 2006. “IDAs are legally empowered to buy, sell, or lease property and to provide tax-exempt financing for approved projects.”
Every county in New York has an IDA, as do numerous municipalities. (For example, New York City has its own IDA.)
What Are the COVID-19 Grants and Loans From IDAs?
The law states that IDAs may provide grants or in-kind donations (i.e., donating goods or services directly) of a maximum of $10,000 to businesses and nonprofits. These grants can be used for the purchase of Personal Protective Equipment (PPE) “and other fixtures needed to help prevent the spread of COVID-19.” The law doesn’t specifically state what those other fixtures could be, but they might include the plexiglass guards or social distancing markers that many businesses are installing.
IDAs can also provide loans under the new legislation. The loans are capped at $25,000. The law doesn’t specify exactly what the loans are for, but it does require that businesses submit a proposal for their use of the loan for consideration. Long Island, NY-based Newsday states that the loans “are to pay employee salaries, rent, utilities, and other expenses during the pandemic.” The loans will be interest-free and will have a grace period of 60 days following the end of the state of emergency in New York. They will have to be paid back in full a year after the end of the grace period; there is no penalty for early repayment.
Is My Business Eligible?
According to law firm Harris Beach LLC, eligibility for both grants and loans is determined by 3 factors. The business must show that it:
- Was a financially viable entity prior to March 7, 2020 (the date on which Gov. Andrew Cuomo signed Executive Order 202 declaring a disaster emergency);
- Conducts business in the area served by the IDA; and
- Has been negatively impacted by COVID-19.
What Is My IDA?
As mentioned above, every county in New York has an IDA. So do many large and even medium-sized cities, towns, and villages. Unfortunately, there is no central directory of all IDAs in the state. Contact both the county and city governments where your business is located to see if there is an IDA for that jurisdiction and if it has funds available. Under the new legislation, businesses can only receive funds from one IDA.
Other New York Small Business Loans
IDAs are not the only option for small business relief in New York State. The New York Forward Loan Fund (NYFLF) is available, but it is focusing on very small businesses that have not benefited from other major relief efforts and are in areas that are now reopening. The loans are meant to help with up-front costs associated with reopening during the coronavirus pandemic.
According to a state website, businesses eligible for an NYFLF loan “must employ 20 or fewer full-time equivalent (FTE) employees” (significantly fewer than the 500 employee limit defined by the federal Small Business Administration), and “have gross revenues of less than $3 million per year.” Additionally, eligible businesses cannot have received either an SBA Paycheck Protection Program (PPP) loan or SBA Economic Injury Disaster Loan (EIDL) due to COVID-19.
Does My State or City Have a Similar Program?
About half of all states and many major cities are providing financial relief to small businesses affected by the coronavirus pandemic. The US Chamber of Commerce has created a state-by-state guide to the relief programs.
In addition, some forms of federal aid are still available, including numerous types of SBA loans, some of which predate the coronavirus pandemic.
Now is also a good time to explore traditional private sources of funding, like equipment financing and lines of credit. A lending marketplace like Lendio can help you apply to multiple lenders with one easy application.