Updated March 20, 2020.
In a shift from offense to defense, the Arkansas Economic Development Commission (AEDC) is redeploying funds typically used for job creation projects to instead support existing Arkansas businesses that are being hurt by the economic slowdown associated with the coronavirus outbreak. The state is offering bridge loans, generally of up to $250,000, to businesses. The funds come from two pools of money normally used for job creation economic development grants: the state Quick Action Closing Fund (QACF) and the federal Community Development Block Grant (CDBG) program. Businesses needing capital to sustain operations should consider working with AEDC.
The bridge loan offerings are listed among the resources on the AEDC COVID-19 response website, https://www.arkansasedc.com/covid19, and were announced yesterday, March 18.
$4 million is coming from the Quick Action Closing Fund. This is state money that AEDC should be able to deploy flexibly and effectively. The money is prioritized for small to medium-sized companies that are in the supply chain of essential goods and services, including healthcare, food manufacturing, and logistics. Update: Attorney General Rutledge is reallocating $3 million of additional funding into the Quick Action Closing Fund bridge loan program, for a total of $7 million of available capital.
The other $12 million is Community Development Block Grant money ultimately coming from federal Housing and Urban Development (HUD). Normally AEDC administration is limited to rural areas and small cities (big cities like Little Rock typically administer their own programs). And normally there are months of red tape involved. Hopefully the coronavirus emergency will allow expediting and more flexibility as to how CDBG monies are deployed. (Governor Hutchinson and other governors have asked the federal government for flexibility.)
Businesses interested in AEDC support to cope with the coronavirus crisis can contact AEDC directly at COVID19.firstname.lastname@example.org. Here at DDH we are familiar with both Quick Action Closing Fund and Community Development Block Grant programs and can assist businesses interested in state support.
Update: The disaster declaration is official and businesses can begin applying. Arkansas businesses can apply for Small Business Administration disaster relief loans of up to $2 million to assist small businesses. Businesses can begin reviewing the information required, so that they are ready to apply once the disaster is declared. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. The term may be as long as 30 years depending on ability to pay.
Arkansas's unemployment insurance system is also of critical importance in responding to the economic fallout from the coronavirus pandemic. The state has built up a strong $800 million surplus in its UI trust fund, and drawing down those monies will help keep the economy afloat. The administration has allowed applications for unemployment benefits to be online rather than in-person, and the system will take into account the challenge of looking for work in the midst of a pandemic--essentially waiving or at least minimizing the requirement to look for work. To get money to people in need faster, Governor Hutchinson has also waived the regular one-week waiting period before benefits kick in. In addition, businesses considering short-term layoffs may be interested in exploring the Shared Work Unemployment Compensation Program, which allows a company to cut workers' hours and have them claim partial unemployment instead of completely laying off employees.