The city of Tempe is partnering with Desert Financial Credit Union to offer $1 million in emergency loans to small businesses struggling to make ends meet amid the COVID-19 pandemic.
The Small Business Emergency Loan Program will offer microloans for businesses to take out between $5,000 to $20,000, according to a press release from the city.
The loans will be given out either for the next three months or until the program loans $1 million to local businesses.
Receiving a loan requires a business to have been operating in the Tempe area for at least two years, have no more than three separate locations, employ between five and 50 full-time employees, have a FICO score of at least 640 and have been negatively affected by COVID-19, Desert Financial President and CEO Jeff Meshey said in a YouTube video.
“These funds can be used to cover operational expenses, such as payroll, utilities, rent, lease payments, taxes and other business related items,” Tempe Mayor Mark Mitchell said in a video.
The program is designed to help “bridge the gap” of other loans and the revenue losses local businesses have faced due to COVID-19, said Kris Baxter-Ging, a public information officer for the city of Tempe.
On Thursday, the U.S. House of Representatives approved $310 billion dollars to go into the now depleted Paycheck Protection Program, The Wall Street Journal reported. The program drew criticism when it ran out of funding, but now that the House has approved the bill, it is headed to President Donald Trump's desk for approval.
The program initially received $350 billion in the economic relief plan passed last month.
“At this time, the federal loan programs are no longer taking applications as funding is depleted, making this loan program not only necessary, but a matter of survival for many small shops, restaurants and service providers,” a press release from the city of Tempe said.
Tempe's Small Business Emergency Loan Program could serve up to 200 eligible companies and loans will be awarded to qualified applicants on a first-come, first-serve basis.
Tempe has just under 4,000 businesses in the city and in just the first day around 50 businesses asked about the program, Baxter-Ging said.
The first payments for the loan will be deferred for 90 days, repayment terms will be up to 48 months and set at a 4% interest rate, the Tempe Small Business Emergency Loan Program site said.
To apply, businesses must complete an interest form, submit an application over the phone with Desert Financial Credit Union, agree to a credit check, provide a personal guarantee and provide documentation for the business to Desert Financial Credit Union.
If awarded a loan, the company must set up a business account with Desert Financial Credit Union, according to the program's website.
“We are doing everything we can to help our local Tempe businesses through this pandemic,” Mitchell said in a press release. “We thank Desert Financial Credit Union for being willing to think creatively with us and for making this program possible.”
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Wyatt Myskow is the project manager at The State Press, where he oversees enterprise stories for the publication. He also works at The Arizona Republic, where he covers the cities of Peoria and Surprise.
