Columbus small businesses that received low-interest loans from a city-funded program designed to help keep companies afloat during the pandemic have started paying back what they borrowed.
The program, called Columbus INvigorate, lent about $874,000 to 48 small businesses within the Columbus city limits last year. The three-year loans ranged from $5,000 to $25,000 and had a six-month deferral of interest. The interest rate after the six-month deferral is 1%.
As of Friday, the loan recipients had collectively paid back $176,810, said Eric Frey, executive director of Administrative Resources association, a nonprofit governmental association that is administering the program. That amounts to about 20% of what was borrowed.
Additionally, four companies — Lockett’s, Yo Mama Frozen Yogurt and More, Dell Brothers and Columbus Rock Gym — have completely paid off their loans, which totaled $90,000. Locketts and Yo Mama subsequently went out of business.
Administrative Resources association transfers loan payments to the city on a quarterly basis and has so far sent about $116,000 back to city coffers, Frey said. None of the 48 recipients have defaulted on their loans.
“We were hoping that this program would help these companies make it through (the crisis), and it seemed like it did,” Frey said. “So a lot of credit to the city and their commitment to the business community.”
The program was created last year as the COVID-19 pandemic swept across the state, forcing countless businesses to temporarily shutter. Thousands of Bartholomew County residents were thrown out of work as the local unemployment rate skyrocketed to around 17% in April 2020.
The Columbus City Council approved the creation of the program and the use of $1 million in city funds for the program on April 21, 2020. The following day, the city started accepting applications through its website and received 15 during the first 24 hours.
City councilman Tom Dell, who is co-owner of Dell Brothers, which would later receive a loan through the program, abstained from voting.
The city money for the loan program included $250,000 from the Economic Development Income Tax Fund, $350,000 from the city’s general fund capital improvement fund and $400,000 in city redevelopment funding, city officials said in a previous interview. The $350,000 in capital improvement funding will come from deferring that amount from planned projects in 2020 and 2021.
To be eligible for the loans, companies had to be in business as of Jan. 1, 2020 and have fewer than 50 employees, no more than $2 million in gross receipts and show a decline in revenue in 2020 due to the pandemic. Priority was given to small businesses with higher credit scores, demonstrated financial need, retention of employees, financial capacity to return to or continue operations, among other criteria.
Loan recipients were required to use the funds for “ordinary and necessary business expenses,” not debt consolidation, and must commit to remain open and retain employees, according to the program’s website.
A total of 43 businesses received loans from the first round of applications in April 2020. An additional six loans were awarded from a second round of applications this past September. One company received loans from both rounds, Frey said.
The total amount loaned to companies over both rounds of applications was capped at $25,000.
