The fund provides interest-free assistance to individuals and businesses.
COVID-19 has caused unprecedented financial strains.
In March 2020, HFLA’s board and staff closely monitored what was happening in other countries. They began to anticipate what would happen to the region if they too were to have a mandate to shut down.
They thought about what kind of loan product could help the community and came up with small, fast-track loans. When they typically offer interest-free loans of up to $ 10,000 for education, standard personal or business loans, these loans are smaller, they are able to get them faster, and they don’t require of guarantor or co-signer.
âIt could be something people could use to stay afloat, to cover a necessary cost when they needed it,â says Hillary Butler, development coordinator, Northeast Ohio HFLA.
Thank goodness for this foresight.
âWhen Ohio Governor Mike DeWine announced the closure of public schools, we immediately announced that day that this program was available,â says Butler. âWe just knew with the schools closing that this was going to be a major financial burden for many working families. They would potentially need to pay for child care and parents could have to stay home and lose income. “
When mandatory business closings began to occur, many began to question how these loans worked. They needed help to supplement the income they had lost.
A valley-specific loan fund was set up with a $ 50,000 collaborative grant from the Community Foundation and the Raymond John Wean Foundation. The loans themselves are then disbursed through the HFLA.
The COVID-19 Emergency Loan for Individuals is designed to help residents whose incomes have been affected by the pandemic. These accelerated loans of up to $ 1,500 can cover lost wages (including self-employed workers), child care expenses, or additional medical costs. The loan can be used for all necessary expenses at the discretion of the loan recipient.
To be eligible, applicants must live in Northeast Ohio, be able to prove that their financial hardship is due to the COVID-19 pandemic, and also 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 wages, rent, and other expenses while business slows down or is on hiatus.
To qualify for this loan, a business must have been in existence for at least 12 months. The business owner is to meet with an HFLA business loan volunteer to discuss how COVID-19 has affected his business. They should provide a recovery plan and should check back periodically for help. The business owner will also guarantee the loan. Loans are made to the business or business owner (s) who own more than 20 percent.
These loans are not intended to replace SBA loans for disaster relief or other funds for which business owners may be eligible, but rather to offer additional support.
All of HFLA’s interest-free loans are reviewed on a case-by-case basis, which is very different from how you would go about getting a loan from a bank or credit union. They don’t just look at a 3-digit score; they take into account the person’s situation and level of need, as well as the person’s or business’s ability to repay the loan.
This last point is important for two reasons. âFirst, we don’t want to give a loan to someone who is going to take on more debt. We don’t want to increase the financial burden, âsays Butler. âSecond, our loans are a revolving fund. This means that every time a loan is repaid, we are able to repay that money.
The idea is that this loan fund could exist in perpetuity for the inhabitants of the Mahoning Valley. What individuals and businesses really need to consider when applying for this loan is: are they able to repay it?
âThese are not heavy payments, we are very flexible, but they have to be able to understand how to take on this financial burden, how they will manage their finances. Being able to understand your budget, your monthly expenses and your potential future income so that we can help you is very important, âshe says.
Companies will need to provide a clear business plan. “If they are in a crisis, we need to know what their plan is to get out of it.”
HFLA also needs to know what the funds will be used for. This could be buying PPE, new software to help the business go contactless, or using it as a gateway to apply for an SBA loan or other financial aid or grant.
Judging from the answer, these loans are indeed sorely needed. The HFLA alone has seen a 400% increase in inquiries and is expanding its staff to meet the demand. They have disbursed more COVID loans than any of their standard loan products; COVID loans represent just under 60% of all loans they have disbursed this year.
So far, three individual loans of $ 1,500 have been made to residents of Mahoning Valley who have suffered loss of income, either due to layoffs or lost hours. Two were single parent families supporting households. One salon received a small business loan; it had to remain closed for an extended period. Not having the possibility of earning an income, the loan allowed the owner to regain stability for the time when the business can finally reopen.
Since only four loans have been made so far, there has not yet been a big hole in that $ 50,000 reserve. The goal is to use up that amount in the first round, see all that money going out into the local economy, and then keep recycling it.
âWe would definitely like to be able to reach more people in this area,â says Butler. “We really hope that these loans will have a lasting impact on the people who received them.”
Butler credits some extraordinary community partners in the Mahoning Valley, most notably the Trumbull neighborhood partnership, Youngstown Neighborhood Development Corporation and the Youngstown Business IncubatorâAny resources she recommends if someone is looking for help.
His last tip? âWhen individuals or businesses are considering this option, just make sure they look at their financial situation realistically,â Butler explains. âConsider creating this personal budget, taking into account your monthly expenses and your realistic income. These are important practices, but they will also give you a very solid foundation if you start the application process.
The HFLA of Northeast Ohio has been providing interest-free loans since 1904. Its mission is to help those without access to traditional loan sources become economically self-sufficient and financially secure.
Applications are continuously accepted. For more information on COVID-19 emergency loans, visit Without interest, contact the loan staff directly by email or call (216) 378-9042.