Improvements made to OLA loan limits and pro-rata insurance for existing debt refinancing for Maine businesses affected by COVID-19
In an effort to keep pace with the evolving financing needs of its customers during the pandemic, the Finance Authority of Maine (FAME) recently approved additional changes to its special COVID-19-related program offerings.
At its June 18 meeting, FAME’s board of directors approved an increase in loan limits for its COVID-designated OnLine Answer (OLA) loan insurance program from $100,000 to $250,000 per lender loan and also approved an increase in its pro- rata insurance coverage for refinancing existing debt from 40% to 50%. For the refi program, paper applications only will be accepted, and there are specific criteria outlined at FAME’s COVID-19 Relief Programs webpage: https://www.famemaine.com/business/programs/covid-19-relief-loan-programs/
These two programs, as well as other COVID-relief programs outlined below, have limited funding and will sunset on September 30, 2020, unless extended by the FAME Board.
In March of this year, FAME announced that it is partnering with local Maine lenders to offer special, limited-time loans and loan insurance to eligible Maine businesses affected by COVID-19. Since then, FAME has maintained close communication with its lending partners and business customers and received feedback in relation to its product offerings, including suggestions on how it could improve and expand them to further help Maine businesses.
FAME and participating lenders have made special terms available to Maine-based businesses that have experienced interruption or hardship due to COVID-19. Benefits include: loans up to $50,000 offered at reduced interest rates; interest-only payments; and up to 75% pro-rata loan insurance on loans up to $100,000. The FAME COVID-19 business response programs are outlined in greater detail at FAME’s website, www.FAMEmaine.com, and in general below:
- COVID-19 Relief Loan Insurance for Lenders: In partnership with lending institutions, FAME will approve ANY Online Assistance (OLA) loan submitted electronically and deemed “COVID-19” at a 50% insurance rate. Some will be eligible using our current standards (and be assessed decreased fees) for 75% coverage. Lending partners will share the risk with FAME and may obtain approval for their loan in an expedited manner. Interested borrowers should contact their local bank or credit union first to see if the lender is offering this program and to apply.
- COVID-19 Relief Business Direct Loan Program: To be utilized when a borrower cannot obtain a loan or OLA from a lending partner. Offers loans up to $50,000 and a decreased interest rate and decreased fee schedule for Maine-based businesses that experience interruption or hardship due to COVID-19.
“During this extraordinary time, FAME is continually re-evaluating our COVID-relief programs to ensure they are meeting the needs of our customers, our lending partners as well as affected Maine businesses,” stated Jay Violette, chair of the FAME Board. “We greatly value the input of our customers and are pleased to offer these changes to our OLA and regular loan insurance programs.”
As noted above, funds for the above programs are limited. FAME has set aside up to $10 million of its reserves for the loan insurance program, which still has approximately $8.5 million available, and up to $5 million for the direct loan program, which has about $2 million in available funds remaining. FAME estimates that the above programs could help to provide $15 million in economic support for approximately 300 small to mid-sized businesses in the state. FAME makes every effort to work with borrowers on special accommodations for their loans, especially during this challenging time.
FAME’s Commercial Loan Insurance Program insures a portion of a loan to a business made by a participating financial institution or investment firm. For a business, it may mean the difference between obtaining a loan or never getting the opportunity to start a business.
The FAME Direct Loan offers reduced interest rate loans to businesses that may not have been able to secure financing through traditional lenders. This program helps new or existing business with flexible gap financing directly from FAME.
The Finance Authority of Maine (FAME) is a quasi-independent state agency that provides innovative financial solutions to help Maine citizens pursue business and educational opportunities. FAME helps to lead the creation of good paying jobs for Maine citizens by working at the nexus between economic and workforce development. To learn more about FAME, please visit www.famemaine.com.