California launching $50 million microlending program to help small businesses
California is rolling out another new loan program aimed at providing small businesses with financial relief during the coronavirus pandemic.
Gov. Gavin Newsom announced the new support for small businesses on Thursday afternoon. He said that 1.9 million Californians have applied for unemployment since March 12.
The state is putting $50 million toward a new “microlending” program through the California Infrastructure Economic Development Bank, or the IBank. The program is aimed at businesses that might not be eligible for Small Business Administration loans or the U.S. Treasury Department's new Paycheck Protection Program and those “who might otherwise fall through the cracks,” Newsom said.
Applications for California's new program will open Friday and will be available through the state's coronavirus portal at https://covid19.ca.gov/.
The state is also creating a $50,000 "bridge loan" and a one-year reprieve from paying sales taxes for small businesses. The policy would allow businesses to defer paying their sales taxes without penalties, fines or interest for a year.
Newsom also encouraged businesses to apply for the SBA's disaster loan program, if they’ve suffered financially from the pandemic. The loans provide $10,000 upfront when the application is being processed, and can provide upward of $2 million. The loans can be paid back over a 30-year period at 2.75% interest.
If businesses continue to pay their workers' salaries, they may also be eligible for up to $10 million through the Paycheck Protection Program. It requires that 75% of the amount borrowed go toward covering payroll and has a 0.5% fee attached. The program application window opens Friday.
“If you commit to keeping our employees, even if you have no work, but you pay your employees, this is a grant program — not a loan program — where you are reimbursed for the costs,” Newsom said.