The changes ushered in by the Coronavirus (COVID-19) emergency have left many Chicago businesses without anticipated revenue to pay fixed expenses, including payroll and benefits. The impact of forced business closures and stay at home orders have left some companies in a very difficult position. Almost overnight the demand for various products and services has plummeted leaving no means to generate income. Scrambling for a lifeline, these businesses not only have to make difficult decisions about expenses but are also searching for loans, grants, and other forms of credit. In response, the CARES Act was passed providing new options including the Payroll Protection Program. While very useful there is another program Chicago businesses should also consider known as the Chicago Small Business Resiliency Fund (Fund). The Fund is designed to provide Chicago small businesses and nonprofits with emergency cash flow. The low interest loan program provides another option to struggling businesses. To help clients, prospects and others, Selden Fox has provided a summary of key details below.
Eligibility Requirements
In order to be eligible there are several requirements which must be met, including;
- Only corporations, partnerships, LLCs, sole proprietorships, and certain not-for-profits may apply.
- The business must have less than 50 employees with 50% whom are Chicago residents.
- Generated gross annual revenue of less than $3 million prior to the emergency.
- Experienced a revenue decrease of at least 25% during the emergency.
- The business must be located within Chicago and have been in operation for at least one year as of the application date.
It’s important to note that chain businesses, nonprofit social clubs, nonprofits with a national affiliation, branch banks, payday loan stores, pawn shops, night clubs, trailer storage, and junk yards are not eligible.
Loan Terms
The loan term is up to 5 years and features interest rates of 1% for the first 18 months and then increases to 5.75% for the loan duration. The loan amount is based on three months average monthly revenues prior to the emergency with a maximum limit of $50,000.
In terms of repayment, for the first six months businesses are only required to pay $10 for account maintenance. In months seven through 12 there is only an interest payment requirement and beyond that principal and interest payments are due. It’s important to note funds must be used for working capital with at least 50% going to payroll. In addition, applicants must agree to maintain 50% of its workforce at pre-emergency levels for at least six months. There is no pre-payment penalty.
Application Requirements
The application process requires various financial, tax, credit and other information to be disclosed. This includes a valid Chicago business address, Chicago business license, copies of bank statements from October 2019 through February 2020, most recently filed tax return, and a personal guarantee and credit check. Finally, there will be a City of Chicago debt check to identify applicants with outstanding liabilities. It’s important to note the business owner with the largest ownership share is required to apply for the loan.
Loan Funding
The Fund is committed to processing loan applications as quickly as possible and all applications are reviewed on a case-by-case basis. It is recommended to compile all necessary documentation to accelerate loan processing and avoid delays.
** With the ever evolving changes of the COVID-19 stimulus opportunities, please refer to our Response to COVID-19 page for the most up to date information. Please contact us if you have specific questions. **
Contact Us
The Fund represents a unique opportunity for Chicago businesses seeking a working capital infusion. While loan funds are restricted to certain expenses, it creates breathing room for struggling companies. If you have questions about the information outlined above or need assistance with COVID-19 business planning, Selden Fox can help. For additional information call us at 630.954.1400 or click here to contact us. We look forward to speaking with you soon.
