Lamont files request for SBA disaster declaration in Connecticut

Mar. 16--The governor of Connecticut issued a formal request for the U.S. Small Business Administration to issue an economic disaster declaration covering the state, which would allow proprietors to apply for low-interest loans and other assistance as revenues dwindle due to the outbreak of the novel coronavirus COVID-19.

Gov. Ned Lamont made the SBA request part of a package of executive orders over the weekend that includes the closure of public schools statewide through the end of March, on the heels of the Centers for Disease Control & Prevention issuing an advisory for the postponement of gatherings of 50 or more people.

The Connecticut Department of Revenue Services extended by three months the state's April 15 deadline for filing some business-related taxes, and indicated it will follow the lead of the Internal Revenue Service in adjusting any dates for personal income taxes.

Lamont had declared a public health emergency in Connecticut on March 10, with many businesses having continued to operate as normal last week. There were tangible signs Sunday, however, of people changing their accustomed routines, including at Danbury Fair mall where parking lots had far fewer vehicles than the previous weekend.

Some Fairfield County restaurants have closed their dining rooms while continuing takeout and delivery services. The governors of Massachusetts, California, Illinois, Ohio and Washington ordered the closure of restaurants and bars for varying lengths of time.

"The impact of this global pandemic to businesses across the state has been significant," Lamont wrote in his Monday letter to the SBA. "Owners of inns, venues, restaurants and other service industry companies, have reported a large number of cancellations. Businesses owners arc unable to meet their financial obligations with this sudden reduction in revenues."

The SBA had signaled last Thursday it would work with states to issue loans of up to $2 million to businesses impacted by coronavirus, with funds allowed to be used for employee wages, keeping up on other loan payments and other bills that are outstanding.

The SBA has district offices in Hartford and Bridgeport, with the agency having cut its staffing significantly in the two years, including more than 1,500 jobs in its disaster assistance offices as calculated on a full-time equivalent basis, leaving it with a staff of less than 2,100 positions. Two years ago, however, the SBA completed a modernization of its disaster loan management system, which it stated allowed it to process double the number of applications as in previous years.

The SBA will charge an interest rate of 3.75 percent for businesses that are unable to secure loans from other sources, with payment schedules available of up to 30 years. Aid is available as well for private nonprofit organizations at a 2.75 percent interest rate, with the SBA listing requirements for qualifying entities online at www.sba.gov.

In past disaster declarations, SBA has charged double the interest rate for businesses that have access to other sources of credit, while offering nonprofits the low rate regardless of whether they can tap other sources. After the Federal Reserve slashed its benchmark rate over the weekend by a full percentage point, M&T Bank was among the first Monday to announce a newly revised prime lending rate of 3.25 percent.

During the 2009 collapse of the housing market, banks constricted business lending sharply in Connecticut and elsewhere on concerns of the ability of borrowers to keep up with payments, prompting former Gov. Dannel P. Malloy to fund a Small Business Express loan program to pick up some of the slack. Lamont this month signaled his plan to convert the Small Business Express into a guarantee program for loans extended by the commercial sector, akin to the SBA's 7(a) and 504 guaranteed loan programs.

Between loan guarantees, direct loans and disaster assistance, SBA supported $143.5 billion in capital to small businesses nationally entering the 2020 fiscal year, including $2.2 billion disbursed in 280 disaster declarations.

Connecticut last received an SBA disaster declaration in October 2018 -- at the time the SBA's administrator was Greenwich resident Linda McMahon -- following a windstorm and tornado that tore through a swath of Fairfield County and New Haven County in May that year. Businesses had nine months to apply for economic disaster funding as part of that declaration.

[email protected]; 203-842-2545; @casoulman

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