The MSBDFA* Program-COVID-19 Emergency Relief Loan Fund
FREQUENTLY ASKED QUESTIONS
What are the qualifications to be considered for a loan? The business MUST:
- Have been in business prior to January 1, 2019.
- Have 51% of its ownership with personal credit score(s) of at least 550.
- Have its principal place of business must be in Maryland.
- Be in good standing with the state of incorporation and qualified to do business in Maryland, if not a Maryland corporation.
- Demonstrate financial stress or disrupted operations that were due to the COVID-19 pandemic crisis.
What businesses are ineligible to receive assistance?
- Non-profits organizations
- Financial and Insurance institutions
- Gambling operations
- Real estate investment companies
- Real estate development companies
- Massage parlors
- Cannabis related businesses
- Businesses that have previously received a COVID-19 loan from the State of Maryland
How soon will I know if my business has been approved for a loan?
It is difficult to provide a specific timeline. There are many factors that can shorten or length the approval process. The applications will be processed on a first come, first served basis. Some of those factors are the number of applications received, the number of applications ahead of you, whether your application is complete, etc. We will process the complete applications as quickly as we can. Your patience will be appreciated. Incomplete applications will be declined and when complete can be resubmitted (a new submittal date would be applied).
What is the is the approval process?
Once a complete application is received, MMG will underwrite the loan request, contact you to clarify any questions it may have, determine if it can recommend the loan for approval, if so, present the loan to the MSBDFA loan committee, and you will be notified of the results.
If approved, how soon will funds be received?
It is the objective to have approved loans closed within 2 weeks. Loans of $100,000 or more may take a longer time to settle due to the need for more documentation.
What if I do not have a 2018 and/or 2019 financial statement?
Federal tax returns can be used instead for either or both years. Bank statements, credit card statements, income logs, expense logs, etc. are not acceptable as replacements for 2018 or 2019 Financial Statements or Federal Income Tax Returns.
What if I do not have a 2020 interim financial statement no older than 5/31/20?
The 5/31/20 interim financial statement or one more recent will be the best determinate of the effects of COVID-19 on your business and expediate the underwriting of the application. If you do not have an interim financial statement you will need to provide at least one or more of the following for the purpose of evaluating the effects of COVID-19 on your business:
- Evidence that reflects the inability to pay rent, make loan payments, pay suppliers, pay employees due to reduced revenue or suspended operations.
- Evidence of increased costs related to COVID-19 prevention measures.
- Evidence of disrupted supply network leading to shortage of critical inventory/materials.
- Other evidence of business disruption due to COVID-19 subject to review on a case by case basis.
Any and all of these alternatives to the 5/31/20 or more recent interim financial statements will result in the underwriting process taking longer to complete.
Am I allowed to make loan payments in the first 12 months of the loan term?
Yes, you can make principal payments on the loan in the first 12 months, but there is not requirement to do so.
Is a personal guaranty of the loan required?
For loans of $50,000 or less, a personal guaranty is not required. For loans above $50,000, a personal guaranty is required.
Is there a pre-payment penalty if the loan is paid off before maturity?
No, the loan can be paid in full at any time during the term of the loan.
Are there any collateral requirements for the loan?
No collateral is required for loans that are $100,000 or less. Loans of $100,000 or more will be required to provide a Uniform Commercial Code (UCC) lien on all of the borrower’s business assets.
Can my loan term be longer or shorter than 5 years?
No. The loan term can effectively be shorter by paying off the loan with no penalty at any time prior to maturity.
How can the MSBDFA COVID-19 loan funds be used?
The funds can be used to pay payroll expenses, rent/mortgage payments, utility expenses, or other expenses that occur in the ordinary course of operating the business. The funds can also be used for the acquisition of equipment, vehicle, or facility improvements to adjust to the need to “change the way you do business” during and after the pandemic crisis.
The funds cannot be used to pay off an existing loan or for any personal expenses.
What is the interest rate for the loan?
The interest rate will be 0% for the first 12 months and 2% for the remaining term of the loan.
Will these loans convert to grants?
If my business received a COVID-19 loan or grant through the State of Maryland, can my business still apply for this loan?
If your business received a COVID-19 loan from the State of Maryland, your business is not eligible to apply for a MSBDFA COVID-19 loan. If your business received a COVID-19 grant from the State of Maryland, your business is eligible to apply for a MSBDFA COVID-19 loan.
If my business received a COVID-19 loan from a U.S. federal agency or county/local government source, can my business still apply for this loan?
Yes, the business can apply but before it does so, it should verify that the any loans it does have, including COVID-19 loans, does not prohibit the business from obtaining additional loans.
If my business receives a MSBDFA COVID-19 loan, am I still able to apply for other MSBDFA non-COVID-19 financing?
If your business receives a MSBDFA COVID-19 loan or if it does not; your business is still able to apply for MSBDFA’s other financing programs.
Are you accepting applications for the other MSBDFA financing programs?
Yes, applications for MSBDFA’s other financing programs will continue to be accepted.
HOW TO APPLY:
Beginning July 20, 2020, applications can be obtained and submitted on the Meridian Management Group, Inc. website, www.mmgcapitalgroup.com. Hard copies of the application can be scanned and emailed to firstname.lastname@example.org or mailed to:
Meridian Management Group, Inc.
826 E. Baltimore Street
Baltimore, MD 21202
Attn.: MSBDFA COVID-19 Fund
*The Maryland Small Business Development Financing Authority (“MSBDFA”) is an agency under the Maryland Department of Commerce and is managed by Meridian Management Group, Inc. (“MMG”).