Short Term Forgivable Loan Program

Section 47 of Act 183 (S.11), enacted during the 2022 legislative session, created the VEDA Short Term Forgivable Loan Program to support  businesses experiencing continued working capital shortfalls as a result of the COVID-19 public health emergency.  VEDA was appropriated $19.0 million from Vermont’s American Rescue Plan Act (ARPA) funds to make loans to businesses that meet the eligibility criteria of the program. 

The VEDA Short Term Forgivable Loan Program will provide financial assistance to businesses that continue to experience current and on-going economic harm due to the COVID-19 pandemic.

As of November 1, 2022, the program is open to all business sectors. Please submit applications to flp@veda.org.

Please note: Businesses (including sole proprietors and not for profits) working in the arts, culture, and creative economy sectors may be eligible for a Creative Futures Grant from the Vermont Arts Council. Please visit their webpage here for additional information.

Eligibility

To be eligible for this program, applicants must meet all of the following criteria:

• Businesses located in Vermont with fewer than 500 employees (includes sole proprietors and not-for-profits).
• Businesses that were in operation (or had taken substantial steps toward becoming operational) as of March 13, 2020;
• Businesses that can demonstrate and attest to economic harm caused by or exacerbated by the pandemic and such economic harm is ongoing.
  • Economic harm defined as the cumulative reduction in Adjusted Net Operating Income in calendar years 2020 and 2021 compared with 2019, of at least 22.5%.
  • The FLP Calculator Tool, downloaded as part of the application package, will help determine your eligibility, simply by inputting your previous Covid relief grants received and a few details from your business tax returns from 2019, 2020, and 2021. Applications or questions may be directed to flp@veda.org.

Eligible Use of Proceeds

• The Forgivable Loans can be used to pay for eligible operating expenses, but not for capital expenditures.
• Eligible operating expenses include but are not limited to payroll, mortgage interest, rent, utilities and other operating costs. There is no specific percentage required on payroll costs.
• Owners’ compensation is an eligible use of loan proceeds, however the forgivable portion of owners’ compensation is limited to the lesser of $100,000 per year per owner, or the amount of annual owners’ compensation paid in 2019.

Determination of Loan Amount

• The FLP Calculator Tool will calculate an estimated loan amount. As directed by the legislative intent of this program, the FLP Calculator Tool places emphasis on current and on-going financial needs. Your business’ 2022 financial data is critical because the formula for the estimated loan amount places more weight on the most current financial data comparted to prior periods.
• In addition, the maximum loan will be the lesser of (1) $350,000; (2) six-months of operating expenses; or (3) the cumulative reduction in Adjusted Net Operating Income in years 2020 and 2021. 
• If a business has seasonal influences, please provide financial data from the first six-months of 2019 for a comparable period.
• Final Loan Amount will be determined by VEDA after taking all relevant information into consideration.

NOTE: The Estimated Loan Amount shown in the lower left-hand box in the FLP calculator Tool is only an estimate. The final loan amount will be determined by VEDA after taking all relevant information into consideration and will be communicated to you directly from a VEDA Staff member. 

Loan Forgiveness

• Borrowers will have 12 months from the date of loan funding to apply for forgiveness.
• Loan Forgiveness will be determined based upon documentation submitted showing that the loan was used to pay for eligible operating expenses during the 12 months following the loan disbursement date.
• Application for loan forgiveness will be posted to this page at a later date. 

Loan Terms

• Collateral: None (Unsecured)
• Interest Rate: 0%
• Fees: None
• Personal Guarantees: Yes – from any 20% or more owner. (Does not apply to not-for-profit businesses.)
• Term: Up to 24 months with 1st 12 month no payments. If loan is not fully forgiven during initial 12 months, the loan converts to a 12-month, fully amortizing loan at 0% interest. 
• Expectation: Loan proceeds will used for eligible operating expenses, resulting in full forgiveness. 

Application Process

• Please download a complete application package here. Any questions and applications may be directed to flp@veda.org.
• Applicants are highly encouraged to seek technical assistance (TA) for determination of eligibility prior to applying. Information on TA provider(s) is available here: 
  
  • VtSBDC