Businesses are struggling to bounce back and now a state plan that was supposed to provide relief could do more harm than good.
The plan calls for loans, similar to ones businesses used after Hurricane Irma, but there’s one major difference: the interest rate.
Last week, Gov. Rick Scott announced an emergency bridge loan program, giving $50,000 to small businesses affected by the water quality crisis.
It’s the huge interest rate in the fine print that’s causing trouble.
“The interest rate on these things is 18 percent which is the highest rate you can charge in the state of Florida by law .. anything higher would be illegal in the state of Florida,” said Captain Jon Black of Crazy Lure Bait and Tackle.
He says he’ll pass on that deal.
The interest rate doesn’t kick in until after 6 months.
“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,” he says.
Michael Westra, Owner of Lehr’s Bait Shop, says he’s not cashing in on the program either.
You only have six months to pay off the loan and if not, “you 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 for natural disasters like the Small Business Administration offers up to $2 million at three percent interest for up to 30 years.
“Government trying to help me out in this case ..I’m not going to say seems predatory, but it seems right on the edge of that,” Westra said.
For his business it’s a risky move.
“I think it’s a pretty sorry option because if you don’t make that, you’re going to get hit .. I mean 18 percent isn’t fun, it’s not a fun ride.”
Experts say this loan only applies to those who are small businesses with two or more employees, so charter captains and realtors aren’t able to apply.
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.