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The Legal Brief

COVID-19 Working Capital Access Program Funding Approved for Pennsylvania Small Businesses

March 26, 2020

By: Jason L. Ott

On March 25, 2020, Pennsylvania launched the COVID-19 Working Capital Access Program (the “CWCA”) to help Pennsylvania small businesses impacted by the COVID-19 virus. CWCA is a new program authorized under the Small Business First Fund (the “SBFF”) of the Pennsylvania Industrial Development Authority (the “PIDA”).

The Pennsylvania Commonwealth Financing Authority (the “CFA”) authorized the transfer of $40 Million to the SBFF for the CWCA, and the PIDA authorized making $60 Million of funding available to certain small business enterprises. To qualify for the CWCA, eligible borrowers must have 100 or fewer full-time employees and be for-profit business entities involved in the business-to-business service, business-to-public service, mercantile, commercial, or point of sale retail sectors, specifically including agricultural producers involved in the management and production of farm commodities. Those loans will be in the amount of $100,000.00 or less, depending on the business profile and needs of each loan applicant.

Notably, CWCA loan proceeds may be used to fund working capital, defined in this program as the money that a small business uses to fund business operations, excluding fixed assets and production machinery and equipment, incurred both post-loan closing and for the three months prior to submitting its loan application. Retail/service businesses will be eligible to us those loan proceeds to pay for working capital costs incurred up to six months prior to loan application submission. Funds are expected to become available as early as this week.

To apply for a CWCA loan, a borrower must submit its application to the Certified Economic Development Organization for the Pennsylvania county in which its principal office is located.  Terms of CWCA loans include:

  • generally for three-year terms, amortized over 12 years;
  • 0% interest rate (except for agriculture producers to whom other rates may apply);
  • CWCA loans to take the first available lien position over all assets of the borrower;
  • all individuals owning 20% or more of the equity in each borrower to sign a personal guaranty of the loan; and
  • borrowers will not be required to make any loan repayments for the first 12 months post-loan closing and thereafter, will remit only amortized payments for the following 24 months, with one final balloon payment for the remaining balance being due 37 months after the loan proceeds were first made available.


The PIDA advised that it may consider certain criteria in determining loan eligibility, including: (i) at least a break-even financial performance in the prior business year; (ii) an acceptable personal credit history of all the guarantors of such loans; and (iii) the adequacy of historical cash flow to fund loan obligations, but the CFA has made it clear that it intends to provide support to as many Pennsylvania small businesses as possible to maintain the Commonwealth’s economy and financial well-being as we all tackle the challenging weeks and months ahead.


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