The City of Los Angeles will lend businesses up to $20,000 to soften the economic blow of the coronavirus pandemic that has put many businesses on hold.
Mayor Eric Garcetti announced the $11 million “economic relief package for small businesses” on Wednesday, two days after he ordered the emergency closure of bars, clubs, and other high-traffic businesses. The program was approved by the City Council.
The Economic and Workforce Development Department will provide loans of between $5,000 and $20,000 to cover working capital. The loans come with no fee, but could include interest. The interest rate can be zero percent for terms of between six months to a year, or three-to-five percent for terms up to five years.
There is no credit score minimum to qualify for a loan, but there are a handful of other conditions needed to qualify.
Businesses will have to prove they were impacted by the pandemic and show that historical profits were enough to meet their debt obligation. Business owners who own more than 20 percent of a company must guarantee the loan. Bankruptcies and debt write-offs must be at least a year old.
The loan program is the latest in a suite of measures the city government has taken up in response to the coronavirus pandemic. On Sunday, Garcetti enacted a six-month moratorium on residential evictions and a three-month moratorium on commercial evictions.
The City Council now wants to extend both of those moratoriums to 12 months and remove a requirement that people prove they were adversely affected by the pandemic.