Local economic development advocates are doing what they can to keep businesses afloat for the duration of the COVID-19 quarantine.
Last week, Tracy Economic Development Management Analyst Barbara Harb and Tracy Chamber of Commerce CEO Tamra Spade hosted an online webinar outlining some of the options available to businesses, including federal, state and local programs designed to lend or grant money to local businesses that have scaled back operations or laid off workers.
During their April 22 presentation, Harb highlighted the city’s Grow Tracy Loan Program, an existing loan program supported by the National Development Council’s Grow America Fund. It provides loans of $100,000 to $2 million to businesses that have been in town for at least two years and have up to 100 employees. The money can be used for equipment, inventory, tenant improvements and real estate purchases.
It’s an existing city program from 2009, which at one point had been funded with up to $4 million, has provided 11 local loans, and still has about $800,000 to lend. Now the city is marketing that program in response to COVID-19. Harb sees it as a way to help reboot the local economy.
“Many businesses nowadays, when we start rolling out of the stay-at-home order and they start relaxing some of that and they start opening up businesses, they’re going to need to start increasing their inventory again,” she said.
Spade also mentioned the Chamber of Commerce Small Business Fund, which provides grants of up to $1,000 to Tracy businesses as a way for the chamber to help businesses support each other.
For last week’s webinar, they brought in Nate McBride, executive director of the San Joaquin Delta College Small Business Development Center, to highlight the two most prominent federal programs providing money to businesses across the U.S.
The Paycheck Protection Program is a central feature of the Coronavirus Aid, Relief and Economic Security Act, a $2 trillion stimulus package passed on an overwhelming bipartisan vote in the Senate on March 25 and signed into law by President Donald Trump on March 27.
The original Paycheck Protection Program included $349 billion to provide loans of up to $10 million to cover 2½ times a business’ monthly payroll costs.
“That’s the intent of that program, to bring people back on or keep them on for an eight-week period,” McBride said. “If they use at least 75% of the loan amount and come back at the same level of employment they had before the disaster, the loan might even be forgiven.”
It was such a popular program that all the money was spoken for by mid-April, and last week the U.S. House of Representatives passed, and the president signed on Friday, a follow-up bill that put another $300 billion toward the Paycheck Protection Program.
“Since this thing broke, our phone is ringing like crazy, so we’ve taken a lot of calls and tried to disseminate as much up-to-date information as we can and assist businesses going after this money as best we can,” McBride said.
McBride added that his office doesn’t set up the loans, but he does advise people on where to go. Many local banks are able to process the loans.
“The first place to start with is the financial institution that somebody already has a relationship with, but not all of those financial institutions are accepting those applications, and some of them did accept them in the first round and they’ve already loaned all the money they can lend and don’t have capacity to do any more,” McBride said. “So finding additional lenders has certainly been a challenge, at least for some that don’t already have a bank or a place they can turn to.”
Harb said the city’s economic development office doesn’t have statistics on how many local businesses get that federal support, but there is obviously a need for it.
“I know of a couple of businesses I’ve spoken to directly that have applied, but I don’t know firsthand if they have received anything,” she said.
Most of the money for the Paycheck Protection Program, about $190 billion, went into loans of less than $1 million each, including 1.2 million loans, about 74% of the total number of loans, for less than $150,000. About $30.9 billion went toward 4,412 loans of more than $5 million each.
Another program open to small businesses is the Economic Injury Disaster Loan. It was funded by $10 billion in the original CARES Act, and doubled to $20 billion in last week’s bill. McBride said it is broader in terms of what the money can be used for.
For that, a business would apply directly to the U.S. Small Business Administration, and it could provide up to $2 million for working capital.
Information on where that money is going locally was not available, but the U.S. Small Business Administration reported that California businesses got nearly 113,000 loans worth $33.4 billion from the Paycheck Protection Program. Nearly 9,000 loans worth nearly $1.9 billion came to California businesses through the Economic Injury Disaster Loans.
McBride also mentioned the state of California’s Small Business Disaster Loan Guarantee, up to $50,000 for businesses and nonprofits with up to 750 employees. The state’s Small Business Finance Center is able to process loans.
McBride added that the Pandemic Unemployment Assistance program helps business owners, self-employed workers and independent contractors through a program similar to regular state unemployment benefits. The California Employment Development Department runs that program.