The Metropolis of Aiken’s small-business revolving loan program got here to an official finish Friday, Could 22, and issued $464,200 to companies all through its two-month run.
This system was met with the inquiry of over 350 enterprise homeowners all through Aiken, the vast majority of whom have been solely looking for council about federal loans and different choices because the coronavirus pandemic threatened their companies in mid-March.
“A variety of [businesses] wished assist with the [federal Paycheck Protection Program loans] … and a few did not wish to borrow cash in any respect,” stated Tim O’Briant, the town’s financial improvement director. “They wished recommendation on what was out there and what they may do to generate some income … however everybody who was fascinated by a loan was capable of get by way of the appliance course of.”
The choice to shut this system got here when companies started to reopen throughout the previous month, O’Briant stated, simply as this system was approaching its 61st day as specified within the emergency ordinance handed by Aiken Metropolis Council in mid-March.
With the help of Safety Federal Bank, the Aiken Chamber of Commerce and Aiken Corp., the town was capable of put collectively a bundle of $1 million to develop this system that funded loans of as much as $10,000 for qualifying companies.
Phrases for the loans embody an quantity of $5,000 or much less for one 12 months or an quantity between $5,001 and $ 10,000 for 2 years.
Curiosity and compensation of the loans might be deferred for six months after every loan is granted – however a 2% curiosity on the loan would accrue throughout that point. Compensation for the loans is about to start out happening no sooner than this fall, O’Briant stated. There could be no penalty for early compensation.
Town obtained a complete of 52 loan purposes from companies all through the course of this system, 47 of which have been accredited.
The 5 purposes that weren’t accredited didn’t meet sure necessities for this system, equivalent to not being in enterprise lengthy sufficient, O’Briant stated.
“Somebody may have had an excellent marketing strategy … however they’ve solely been in enterprise since December,” O’Briant stated.
The accredited enterprise have been from throughout Aiken.
The subsequent step for this system lies in residents paying again their loans. To this point, O’Briant isn’t anticipating a excessive default charge, although how companies can pay again their loans will depend upon how the financial system recovers through the pandemic, he stated.
The unique default projection was specified at 25 to 30%, which O’Briant and different metropolis officers are hoping might be a lot decrease.
“The folks we ended up lending cash to are excellent enterprise folks with usually a protracted monitor report … so we really feel very assured with the enterprise folks we labored with,” he stated.
The funds from the $1 million bundle will solely be utilized if a borrower defaults on the loan and doesn’t repay the cash.
Federal loans are nonetheless out there for residents, although O’Briant instructs anybody who may want a loan to behave quick in case federal packages, such because the Paycheck Safety Program, have a repeat of working out as they did in mid-April.
“It is a difficult factor as a result of [the federal government] put $three billion [into the program] … my default place could be assume that they are going to shut this system and apply now.”