New Fund Offers Loans To Small Businesses In South As They Recover From COVID-19
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Applications for a new fund looking to help small businesses in the South recover from the long-term economic effects of the coronavirus pandemic are now open.
The Southern Opportunity and Resilience Fund is financing loans of up to $100,000 to small businesses in North Carolina and 14 other states.
The program was created by 13 Community Development Financial Institutions with the intention of supporting small and minority-owned businesses. The SOAR Fund currently has $50 million, but fundraising is underway to raise an additional $100 million.
In North Carolina, the Natural Capital Investment Fund is the CDFI that will finance loans to the state’s small business owners.
“Its objective is to provide support to small businesses, those with fewer than 50 employees that have been impacted by COVID-19,” said Rick Larson, senior vice president of the Natural Capital Investment Fund.
Unlike the Paycheck Protection Program, the SOAR Fund loans don’t have a forgiveness option and will have to be paid back. But interest rates are low; Larson says interest rates for the loans are at 4% for for-profit businesses and 3% for nonprofits.
“Any good lender and certainly any CDFI like ours is not going to make a loan to a company that is going to leave that company in a worse place than it was before they got the loan,” Larson said.
The goal is to provide financial support to small and minority-owned businesses that need the money the most.
“We're able to do a better job reaching women and minority borrowers just by focusing on their needs, focusing on the right-size businesses — those that have 50 or fewer employees — and providing them with the amount of money that they need, which is up to $100,000 at good interest rates,” Larson said.
Money from the SOAR Fund can be used for inventory, marketing and rent, among other things.
So far, more than 800 businesses have applied on the SOAR Fund’s website across the 15 eligible states.