Desert Financial and Tempe, Ariz., team up on small business lending
Desert Financial Credit Union in Phoenix, Ariz., and the city of Tempe, Ariz., are working together on a $1 million emergency loan program to help local small businesses survive the coronavirus pandemic.
The Tempe Small Business Emergency Loan Program will provide microloans of $5,000 to $20,000 to companies with between five and 50 employees.
Businesses across the country have struggled as consumers have curbed spending amid orders to stay at home to slow the spread of the coronavirus. Officials also have ordered non-essential companies to close or limit operations.
It’s expected the program could help up to 200 companies. Borrowers can use the money for expenses necessary for continuing their operations, such as covering payroll and rent. The initial payment for these loans will be deferred for 90 days.
The initiative will run for three months or until the guaranteed funds run out.
The program is meant to help while “federal loan programs are no longer taking applications as funding is depleted, making this loan program not only necessary, but a matter of survival for many small shops, restaurants and service providers,” according to Tempe’s website.
Congress approved on Thursday another $320 billion in money for the Paycheck Protection Program through the Small Business Administration. That program has proved widely popular, with the initial $349 billion allocated for those loans running out in less than two weeks.
Loans through the Tempe program have a fixed rate of 4% with repayment terms up to 48 months, according to the $5 billion-asset Desert’s website. Desert has also participated in PPP loans, according to its website.
VyStar Credit Union set up a similar program with its hometown of Jacksonville, Fla. Under that program, the $9.1 billion-asset VyStar is offering loans up to $100,000 to area small businesses while Jacksonville is providing a number of financial perks for borrowers, such as covering the $250 underwriting fee for loans over $5,000.