State officials are finalizing the terms of a bridging loan program for Connecticut businesses facing a revenue shortage pending the release of federal emergency loans or other aid.
The quasi-public company and state loan arm, Connecticut Innovations (CI), will review and fund the loans, which will total $ 75,000, with an overall funding commitment of $ 20 million, have CI officials said at a board meeting on Tuesday. Interest and principal payments could also be deferred for a year, officials said.
Department of Economic and Community Development Commissioner David Lehman confirmed the terms to HBJ on Tuesday afternoon and said interest rates would be 0%. He said it is possible that the commitment is over $ 20 million. He said few states have yet implemented a bridging loan program of this size. Massachusetts, which has a larger population than Connecticut, has started a $ 20 million program, Lehman noted.
CI and DECD were finalizing a memorandum of understanding on Tuesday that would give the program the go-ahead, something officials hinted at in a conference call with companies last week.
DECD would have final approval on all loans, but the agency relies on CI to manage the program and help with underwriting because CI, as a quasi-public agency, does not have to go through some obstacles with the attorney general or the comptroller’s office that the DECD would have to do, meaning the state would be able to withdraw the money faster.
While $ 20 million would fund 275 loans at $ 75,000, Philip Siuta, CI’s chief financial officer and chief operating officer, said he expects to receive nearly 1,000 applications for the program.
“We will all be very busy with this program,” Siuta told board members.
This story has been updated to include information provided by DECD.