Gov. Ned Lamont doubled Connecticut’s emergency business relief program Friday — then immediately suspended applications — after demand quadrupled resources in the first two days.
The state will focus first on processing the roughly 4,000 applications to the Connecticut Recovery Bridge Loan program — representing asks of about $200 million — before deciding whether to recapitalize the program.
But at least one state legislator already has urged Lamont to expand the program, which the governor launched Wednesday with $25 million and doubled Friday to $50 million.
“We will continue to monitor this rapidly evolving situation and keep in close contact with our small business and nonprofit partners as they grapple with the effects of this pandemic on their operations and employees,” Department of Economic and Community Development Commissioner David Lehman wrote to business leaders in an email Friday. “We feel it is prudent to hit pause and stop taking more applications right now to ensure we can process the current queue efficiently and get this much needed money out the door as quickly as possible. “
The administration has projected it could take up to 30 days to process all requests for assistance.
The state is offering interest-free loans calculated to cover three months of expenses for applicants, capped at $75,000. The loans can run for as long as 18 months on the assumption that revenues will return by then, or repayments will be covered by the coming federal money. The loans are limited to businesses with no more than 100 employees.
And while the money will come from revenue on repaid loans administered by DECD, Connecticut does have other pots of money it could tap.
Legislators have authorized hundreds of millions of dollars for various economic development initiatives in recent years and some leaders say a portion of that potential borrowing could be re-purposed for the bridge loan program.
Time of the essence
“I don’t think $25 million is enough and I hope they revisit this and start working on a second phase right away,” Senate Minority Leader Len Fasano, R-North Haven, told the CT Mirror earlier this week, adding that restaurants and other businesses that have been forced to close by state order “should go to the head of the line” when applications are processed.
The president and CEO of the Connecticut Business and Industry Association, Joseph F. Brennan, said if the state can do more, time is of the essence.
“I’m not surprised by the demand,” Brennan said. “It just shows the gravity of the situation, the number of small businesses that have been impacted by the drastic slowdown in our economy.”
Many small businesses are hanging on day by day, Brennan said, adding that immediate assistance not only would keep companies afloat, but would ease pressure on unprecedented unemployment claim filings.
“We’re certainly hopeful that the state can marshal whatever resources that it can,” he said. “There are businesses that haven’t had any revenue in weeks now. Every day it’s growing exponentially, the number of companies that are severely impacted.”
But while state officials weigh the future of the bridge loan program, they will also direct Connecticut businesses to new federal assistance.
Lehman urged businesses Friday to turn to the U.S. Small Business Administration.
The $350 billion Payroll Protection Program will provide federally backed loans through local banks. The loans would not have to be repaid if a borrower maintains its workforce. Larger companies that keep their workforce employed would be eligible for tax credits.
If that many businesses close, Connecticut will require federal aid for the foreseeable future. What is worse is unemployment will reach new highs forcing people to leave when we desperately need them to stay. I really hope the vast majority of those applications are restaurant owners who just want to secure loans in case their operations remain closed for a prolonged period, otherwise this could be capitulation and our state will quickly become insolvent.
I knew from the begining that $25 million was chump change. As I am racing to put together my application for a small portion of that money including tax returns, marketing projections, cash flow, income statements and power of attorney, the Governor has shut down any more applications. Meanwhile, the federal government is sending billions of dollars to the State so that their unionized workforce is fully paid regardless if they go to work or not. Am I surprised by my anger? Not at all.