Hold onto Your Hats – Texas Gets $50 Million in Additional Forgivable Loan Funding
April 13, 2020 by Joshua Smeltzer
Gov. Greg Abbott announced that Texas small businesses struggling to survive the COVID-19 pandemic may gain access to an additional $50 million of private forgivable loans. The funds are apparently made available through the joining of Goldman Sachs’ money with San Antonio non-profit LiftFund’s (a community development financial institution) administration. Goldman Sachs has committed an additional $500 million that will be distributed by other community development financial institutions. Additional information on LiftFund’s loan offering is here.
According to news reports the funds will be made through the federal Small Business Administration’s (SBA) Paycheck Protection Program (PPP). This federal program has been written about previously on our firm website here and here. This, of course, raises issues about how such a program will enhance and interact with the federal program beyond the increased pool of capital. For example, application for the federal PPP loans requires a certification that borrowers do not already have a pending application. Since these additional funds are offered through the SBA, this is likely just extending the funding already available through the PPP loan program specifically for Texas small businesses.
Perhaps details will be provided when Gov. Greg Abbott releases a much-anticipated executive order on how he intends to plan for a potential re-opening of some small businesses closed by the Pandemic. That executive order is expected sometime this week. Funds for the federal PPP loans are dwindling based on high demand and Congress is still arguing about increasing funding for the popular program. This private capital contribution should provide some additional relief for Texas businesses that may be at the end of the line for current federal PPP loan amounts.
The eligibility for the PPP loans and any potential forgiveness of the loan amounts are complicated and fact specific. If you have questions about the available federal and state relief, please reach out to a Brown Fox attorney about your specific situation.