The COVID-19 pandemic presented unprecedented challenges for small businesses across Pennsylvania. Recognizing this economic strain, the Commonwealth of Pennsylvania harnessed federal stimulus funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to launch the COVID-19 Relief Pennsylvania Statewide Small Business Assistance program. This initiative, often referred to as a Business Stimulus Cares Program, was designed to provide crucial financial aid to businesses navigating the economic fallout of the pandemic.
This program allocated $225 million specifically for small business relief, channeled through the Department of Community and Economic Development (DCED) and distributed via Community Development Financial Institutions (CDFIs). These CDFIs, acting as intermediaries, ensured that the stimulus reached businesses that needed it most, offering grants ranging from $5,000 to $50,000. It’s important to note that this wasn’t a first-come, first-served system, but rather a targeted effort to inject stimulus funds where they could have the most significant impact on business recovery.
How the Business Stimulus CARES Program Funds Could Be Used
The stimulus funds provided through this program were versatile, aimed at addressing various critical needs faced by small businesses during shutdowns and reopening phases. Administered by the Pennsylvania CDFI Network, the funding categories included:
- Operating Expense Grants: These grants were crucial for covering day-to-day operational costs during periods of mandated closures and the subsequent transition back to normal operations. This could include rent, utilities, and payroll expenses, helping businesses stay afloat during uncertain times.
- Technical Assistance Grants: Recognizing that financial aid alone isn’t always enough, the program also offered grants for technical assistance. This included training and expert guidance to help business owners adapt, stabilize, and strategically relaunch their businesses in a changed economic landscape.
- Debt Payment Relief: For businesses that were already borrowers with CDFIs in Pennsylvania, the program provided debt payment relief, easing immediate financial pressures and freeing up cash flow.
- Loan Loss Reserves for CDFIs: A portion of the funds was allocated to bolster CDFIs’ loan loss reserves. This strategic move ensured that CDFIs could continue to lend to small businesses, even amidst economic instability, thereby amplifying the reach and long-term impact of the business stimulus CARES program.
The program strategically distributed funds across key initiatives, including the Main Street Business Revitalization Program ($100 million) and the Historically Disadvantaged Business Revitalization Program ($100 million). An additional $25 million was dedicated to loan payment deferment and loss reserves, further demonstrating a comprehensive approach to business stimulus. Notably, the program prioritized businesses owned by women, businesses in areas targeted for state investment, and those in rural communities, ensuring equitable distribution of the stimulus. A significant commitment was made to historically disadvantaged businesses, with at least 50% of grants earmarked for businesses majority-owned by individuals from Black, Hispanic, Native American, Asian American, or Pacific Islander communities, acknowledging historical disparities in access to financial resources.
Eligibility Criteria for the Business Stimulus CARES Program
To ensure that the stimulus funds reached the intended recipients, specific eligibility criteria were established. Businesses seeking assistance through this business stimulus CARES program were required to apply through an eligible CDFI and meet the following minimum requirements:
- Pennsylvania Presence: Businesses had to be physically located and certified to operate in Pennsylvania, generating at least 51% of their revenue within the state. This localized focus ensured that the stimulus directly benefited the Pennsylvania economy.
- Revenue Cap: Eligible businesses had annual revenues of $1 million or less prior to the onset of the COVID-19 pandemic. This revenue threshold targeted the stimulus towards small to medium-sized enterprises.
- Employee Limit: The program was designed for smaller businesses, requiring applicants to have 25 or fewer full-time equivalent employees before February 15, 2020.
- Operational Longevity: Businesses needed to be in operation on or before February 15, 2020, demonstrating an established business prior to the pandemic’s impact. They also needed to have paid state and federal income taxes, confirming their formal business status.
- COVID-19 Impact: A crucial criterion was demonstrating that COVID-19 had caused adverse economic impact, making the grant request necessary for ongoing business operations. This ensured that the stimulus was directed to businesses genuinely affected by the pandemic.
- Use of Funds: Applicants had to confirm that the grant funds would be used to cover COVID-19 related costs, ensuring the stimulus was directly tied to pandemic recovery.
- No Double Dipping: To prevent duplication of benefits, businesses were required to certify that they had not and would not receive another grant under this specific state program between June 1, 2020, and December 31, 2020.
Applying for the Business Stimulus CARES Program: Key Documents
The application process for the business stimulus CARES program required businesses to apply through a participating CDFI. While the specific requirements could vary slightly between CDFIs, businesses were generally advised to prepare the following essential documents:
- Government-Issued Photo ID: Such as a driver’s license or passport, to verify the applicant’s identity.
- Business Financial Information:
- Comparative revenue data for March 1st to May 31st for both 2019 and 2020 to illustrate the pandemic’s impact.
- The most recently filed Federal Tax Return, including 2018 or 2019 business and personal tax returns with Schedule C.
- For startups launched between January 1 and February 15, 2020, an internal Profit & Loss Statement to demonstrate early financial performance.
- Proof of Business Registration in Pennsylvania:
- Articles of Incorporation for corporations and LLCs.
- Fictitious Name Registration or “Doing Business As” documentation for sole proprietorships.
- Business License, if applicable to the business type.
- Bank Account Information: To facilitate direct deposit of grant funds if awarded.
Conclusion: Leveraging the Business Stimulus CARES Program for Recovery
The COVID-19 Relief Pennsylvania Statewide Small Business Assistance program, a vital business stimulus CARES program, played a critical role in supporting Pennsylvania’s small business ecosystem during a period of immense economic disruption. By understanding the program’s objectives, eligibility criteria, and application process, businesses could effectively access these resources and navigate the path to recovery. While the application windows for this specific program have closed, the lessons learned and the framework established serve as valuable insights for future business support initiatives and underscore the importance of targeted stimulus programs in times of crisis. For businesses seeking ongoing support, exploring resources offered by CDFIs and staying informed about future state and federal programs remains crucial for sustained growth and resilience.
