Last week, Governor Rick Scott announced an emergency bridge loan program, giving up to $50,000 dollars to small businesses affected by red tide or blue-green algae. But the interest rate that goes along with it is huge.
All Around Boat Rentals co-owner Vincent Biasella thought help had finally come in the form of a state disaster loan, until he read the fine print showing the interest rate that kicks in after six months, a whopping 18 percent.
Captain John Black says he’ll pass on this deal, “It just doesn’t make sense to get into a situation like that because we don’t know how long this is going to last.”
Michael Westra, owner of Lehr’s Bait Shop says he’s not cashing in on the program either.
You have six months to pay off the loan, “To get a $50,000 loan or $30,000 loan and have 180 days to pay and get nailed with 18 percent .. It doesn’t seem like that’s help.”
Experts say government funding from the Small Business Administration for natural disasters offers up to $2 million at three-percent interest for up to 30 years.
“Government trying to help me out in this case,” but Westra says he’s not taking the bait “I’m not going to say seems predatory, but it seems right on the edge of that.”
Biasella thinks it could be a fair deal if the interest was lower, “6.9, seven, eight percent interest, that’s reasonable. You’re talking about secondary financing here.”
His business is one of 84 in Lee County that’s taken a major hit during the algae crisis a loss totaling about $7 million.
The Small Business Emergency Bridge Loan Program is meant to help make up for some of that loss, short term but Biasella is also worried he couldn’t pay it back in time, “It’s tough paying $20 or $30 thousand back in six months when you really don’t know how our season’s going to be.”
WINK News got the Department of Economic Opportunity on the phone who tells these businesses, don’t worry. The Small Business Development Center will work with you to pay off the loan, even after the deadline.
Tiffany Vause, spokeswoman for Florida Department of Economic Opportunity said, “We’re going to help them pay that loan back. We’re gonna work with them if we have to do installments or however we need to work with them to get that loan back, nobody’s going to be left out to dry.
The high interest rate is meant to deter businesses from taking advantage of public funds.
“We want to make sure we’re spending these dollars in the best interest of the taxpayer dollars while helping businesses get back on their feet,” Vause added.
Governor Scott is also asking the SBA to help with lower-interest rates.
For more information on the loan program visit floridadisasterloan.org.