North Carolina Governor Roy Cooper signed a $1.57 billion coronavirus relief package Monday to aid the state's response to the COVID-19 pandemic. The bill was drafted and passed last week by lawmakers in Raleigh.
Using a portion of the $3.5B it will receive in federal money through the CARES Act, the NC bill includes $125 million for the Golden LEAF Foundation to provide grants to organizations for the purpose of making emergency loans to small businesses impacted by COVID-19. The foundation previously launched a $15 million recovery fund to respond to the crisis, but those funds were rapidly depleted.
Note: This is not a grant program for small businesses. Grants are offered to participating organizations which then offer low-interest loans to businesses.
Loans will be prioritized for establishments that had 100 or fewer full-time workers at the time Cooper declared a state of emergency on March 10th.
A qualifying business must certify that it will use its loan for employee compensation, mortgage, rent, utilities, and other operating costs and expenses. Additional details are as follows:
Loans are available for up to $50,000, based on the business’s current revenue. Loan agreements are structured as follows:
- Loan sizes capped at approximately two months of current revenue.
- Six months of no payments, followed by 48 months of principal and interest payments at 5.5% interest.
- There are no prepayment penalties.
- Defaulted loans are subject to collections.
- Loan terms can be no longer than 66 months.
- Any individual with greater than 20% ownership in the applying business must personally guarantee the loan.
- Proceeds from the loan may only be used for maintaining or restarting a business.
- The use of loan funds to pay off debts already incurred for qualifying business maintenance or restart purposes may be authorized on a case-by-case basis.
- Borrowers are required to assign the proceeds of future assistance programs, including SBA loans, to the repayment of their Rapid Recovery Loan.
Who is eligible?
- Applicants must be a North Carolina small business affected by COVID-19 (all 100 NC counties are eligible).
- Applicants must have at least one (1) employee, who could be the self-employed owner.
- Start-up businesses that began operations before March 23, 2020, are eligible.
Logistics & Timeline
- Businesses interested in applying should be prepared to complete an online application and provide tax returns, profit and loss statements, and bank statements.
- Loans are subject to the availability of funds.
Small businesses may apply for the loan here, but, as always, we encourage you to discuss the matter with your BGW team before taking on additional debt.