The fund offers interest-free assistance to individuals and companies.
COVID-19 has created an unprecedented financial burden.
As early as March 2020, the board of directors and employees of the HFLA observed exactly what was happening in other countries. They began to anticipate what would happen to the region if they too received a mandatory closure.
They considered what type of loan product could help the community and developed low-rate accelerated loans. While they usually offer interest-free loans of up to $ 10,000 for education, regular personal loans, or business purposes, these loans are smaller, they can be paid off faster, and do not require a sponsor or co-signer.
“This could be something people could use to stay afloat, to cover necessary expenses when they need it,” said Hillary Butler, HFLA development coordinator in northeast Ohio.
Thank God for this foresight.
“When Ohio Governor Mike DeWine announced the closure of public schools, we immediately announced that day that this program was available,” says Butler. “All we knew was that schools would be closed on their own, that it would be a huge financial burden for many working families. They might have to pay for childcare and the parents might have to stay home and lose their income. “
When the mandatory company closings began, many asked how these loans work. They needed help to supplement the lost income.
A Valley-specific loan fund was with a community grant of $ 50,000 from the Community Foundation and the Raymond John Wean Foundation. The loans themselves are then paid out through the HFLA.
The COVID-19 Emergency Individual Loan is designed to help residents whose incomes have been impacted by the pandemic. These accelerated loans of up to $ 1,500 can cover lost wages (including the self-employed), childcare costs, or additional medical expenses. The loan can be used for necessary expenses at the borrower’s discretion.
To qualify, applicants must be in Northeast Ohio, demonstrate that their financial hardship was due to the COVID-19 pandemic, and that they can repay the loan under normal financial circumstances.
A similar loan is available for businesses. The COVID-19 Small Business Emergency Loan of up to $ 5,000 can be used to cover payroll, rent, and other expenses while business is slow or paused.
To qualify for this loan, a company must have been in existence for at least 12 months. The business owner must meet with an HFLA business loan volunteer to discuss how COVID-19 has affected their business. You’ll need to come up with a recovery plan and check in regularly for assistance. The entrepreneur also guarantees the loan. Loans are given to the company or to entrepreneurs who own more than 20 percent.
These loans are not meant to replace you Disaster Relief SBA Loans or other funds that business owners may be eligible for, but to provide additional support.
All of the HFLA’s interest-free loans are reviewed on a case-by-case basis, which is very different from how you would get a loan from a bank or credit union. You’re not just looking at a 3-digit score; they take into account the situation and needs of the person and the ability of the person or company to repay the loan.
This last point is important for two reasons. “First of all, we don’t want to give anyone a loan who owes them even more. We don’t want to burden ourselves financially, ”says Butler. “Second, our loans are a revolving fund. That means that every time a loan is repaid, we can pay that money back. “
The idea is that this loan fund can last for the residents of the Mahoning Valley. What individuals and businesses really need to consider when applying for this loan is: Can they repay it?
“These are not high payments, we are very flexible, but they have to be able to handle this financial burden and manage their finances. Understanding your budget, monthly expenses, and potential future income is very important so that we can help you, ”she says.
Companies need to come up with a clear business plan. “If you are in a crisis, we need to know what your plan is to get out of the crisis.”
The HFLA also needs to know what the funds will be used for. This could be the purchase of PPE, new software to help the company go contactless, or it could be used as a bridge to apply for an SBA loan or other financial aid or grant.
Judging by the feedback, these loans are indeed desperately needed. The HFLA alone has recorded a 400 percent increase in inquiries and is expanding its staff to meet demand. They have paid out more COVID loans than any of their other standard loan products; COVID loans make up just under 60 percent of all the loans they have disbursed this year.
To date, three individual loans of $ 1,500 have been made to Mahoning Valley residents who have experienced a loss of income, either from layoffs or downtime. Two were single parents supporting households. A salon received a small business loan; it had to be closed for a long time. With no opportunity to earn an income, the loan allowed the owner to regain stability when the company can finally reopen.
With only four loans issued so far, this $ 50,000 fund hasn’t done much. The goal is to use that amount in the first round, put all of the money into the local economy, and then recycle it further.
“We definitely want to reach more people in this area,” says Butler. “We really hope these loans will have a lasting impact on the people who have received them.”
Butler credits some great community partners in the Mahoning Valley, including the Trumbull neighborhood partnership, Youngstown neighborhood development company and the Youngstown Incubator– any resources she recommends when someone seeks help.
Your last advice? “When individuals or companies consider this as an option, make sure they are realistic about their financial situation,” says Butler. “Remember to create your personal budget by looking at your monthly expenses and realistic income. These are important practices, but they will also put you on a really solid footing when you start the application process. “
Northeast Ohio’s HFLA has been providing interest-free loans since 1904. Its mission is to help those who do not have access to traditional sources of credit become economically self-sufficient and financially secure.
Applications are accepted on an ongoing basis. For more information on COVID-19 emergency loans, please visit Interest-free, email the temporary staff directly or call (216) 378-9042.