Gov. John Bel Edwards in an April 1, 2020, press conference announced the Louisiana Loan Portfolio Guaranty Program (“LPGP”), which program is designed to compliment the federal Payroll Protection Program (“PPP”) and Economic Disaster Injury Loan Program (“EDIL”). The LPGP will offer loans to Louisiana small businesses impacted by the Coronavirus pandemic that employ less than 100 employees, with loan amounts of up to $100,000 for working capital purposes such as payroll, retaining employees, payment of rent, mortgage and other expenses. The loans will be for a maximum term of 5 years and will have a fixed interest rate of 3.5%, with no interest or payments due in the first 6 months. It is anticipated that the total available for this program will be $50 Million.
These loans would be applied for with participating banks and will be subject to the ordinary credit underwriting requirements, including credit review. Louisiana Economic Development will provide a guarantee of the loans equal to 20% of the principal amount of the loan, not to exceed $10 Million, and a 1% participation fee to the bank. Loan details are available at OpportunityLouisiana.com/covid19, and the listing of participating banks is anticipated to be posted at the site by Friday.
Given the overlap in the types of items covered by LPGP, the EDIL and the PPP, one cautionary note is that receiving the LPGP funds may impact eligibility for those other programs.
The LPGP is a partnership between Louisiana Economic Development, the Louisiana Bankers Association and the Louisiana Public Facilities Authority.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.