Local Stimulus For Small Businesses
Harris County COVID-19 Forgivable Loan Program
WHAT IS IT?
In partnership with Harris County, the Houston-Galveston Area Council established an economic loan development program for Harris County small businesses in response to the COVID-19 global pandemic. This program can be used in conjunction with the other disaster loan programs, such as the Small Business Administration’s Paycheck Protection Program and the Economic Injury Disaster Loan Program.
WHAT BUSINESSES ARE ELIGIBLE?
To be eligible, businesses must be located in Harris County, have been in operation before January 1, 2019, have a net worth of less than $15 million, have an average net income of $5 million or less after federal income taxes for the previous two (2) years, and be in good standing with the Harris County Tax Office. Additionally, borrowers must show how their business has been negatively impacted by the COVID-19 pandemic.
WHAT ARE THE TERMS OF THE LOANS?
The basic terms of these loans are as follows:
- Maximum Loan Amount – $25,000
- No interest
- Maturity – 5 years
- Loan Deferral for 3 months
- No prepayment penalties
- No collateral for well-qualified borrowers (more than a 700 credit score)
- Closing costs and collateral security fees paid by the borrower
ARE THERE ANY RESTRICTIONS ON THE USE OF PROCEEDS?
These loans can be used for payroll expenses, to pay accounts payable, and to pay other bills and expenses incurred prior to or due to the economic hardship; however, they cannot be used to buy new fixed assets or equipment, or to renovate or remodel unless such purchases are required due to government restrictions pertaining to the COVID-19 pandemic.
WHAT IS THE FORGIVENESS FEATURE?
Upon email request, the following information was provided by Wendy Almanzan, a Program Coordinator with the Houston-Galveston Area Council:
- 20% of loan balance forgiven after each year, up to 100% after five years
- Option of applying loan forgiveness proceeds toward Harris County tax bills
We are hoping to gather further details on the loan forgiveness aspect of this loan program once the text of the law/order is available on the Harris County website.