The Columbus City Council has approved creating a loan program to help small businesses within the city limits through the COVID-19 pandemic crisis.
City council members approved the program Tuesday, called the Columbus INvigorate program, and the use of $1 million in city funds for the program, which will be administered by Administrative Resources Association, a nonprofit governmental association.
City councilman Tom Dell, who is co-owner of Dell Brothers, abstained from voting because his business could potentially qualify for the program. David Bush, who is primary shareholder of Kenny Glass Inc., did not abstain because his business employs more than 50 people and will not qualify for the program.
The program will allow small businesses within the Columbus city limits the opportunity to apply for a loan ranging from $5,000 to $25,000, city officials said. The loans have a six-month deferral of interest and principal payments on the three-year terms, which do not require collateral but require a personal guarantee from applicants, city officials said. Interest rate after the six-month deferral would be 1%.
The city plans to start accepting loan applications through its website this morning, and the first round of applications is expected to close on April 30. All applications received by the deadline will be considered as being submitted at one time, city officials said.
Columbus Mayor Jim Lienhoop previously said he expects the program will start disbursing funds to approved applicants during the first week of May.
”The COVID-19 emergency health crisis has truly affected all areas of the economy, and we’ve seen that most particularly in small businesses,” said Mary Ferdon, the city’s executive director of administration and community development, during the meeting. “…We’ve seen the effects that’s had locally. Most small businesses in the community have shut down, many of them due to the stay-at-home order.”
The program is being modeled after one that was put in place after the 2008 Columbus flood to assist small businesses in staying solvent and recovering in the wake of that disaster, city officials said.
To be eligible to apply for the city’s loan program, companies must have been in business as of Jan. 1, have fewer than 50 employees, no more than $2 million in gross receipts and show a decline in revenue this year due to the pandemic.
Priority will be given to small businesses that have higher credit scores, demonstrated financial need, retention of employees, financial capacity to return to or continue operations, among other criteria.
The city money for the loan program will come from $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. The $350,000 in capital improvement funding will come from deferring that amount from planned projects in 2020 to next year.
On Monday, the Columbus Redevelopment Commission unanimously recommended that the city council approve $400,000 in Central TIF dollars to help fund the proposed loan program.
On Tuesday morning, the Columbus Board of Public Works approved a resolution that, among other things, laid out some of the details of how the program will work.
The resolution states that businesses must show a 25% decline in revenue this past March compared to March 2019, or a 25% decline in revenue over the last three months due to the public health emergency to be eligible for a loan.
Cindy Frey, executive director of the Columbus Area Chamber of Commerce, said an estimated 400 Chamber members within the city limits could potentially qualify for the new loan program, based on census figures. She also said many more small businesses within the city could qualify, but the chamber doesn’t have data on them to provide an estimate.
“The emphasis again is that this is a loan program, so the expectation is that borrowers would be paying this back. These are not grant funds,” Ferdon said.
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The Columbus INvigorate program is open to small businesses located within the Columbus city limits, though approval for a loan is not guaranteed.
Small businesses interested in applying should expect to put together financial documents needed for any type of loan in anticipation of applying.
To be eligible, companies must have been in business as of Jan. 1, have fewer than 50 employees, no more than $2 million in gross receipts and show a decline in revenue this year due to the pandemic.
The loans will be between $5,000 and $25,000 and have a six-month deferral of interest and principal payments on the three-year terms, which would not require collateral but would require a personal guarantee from applicants. Interest rate after the sixth month deferral would be 1%.
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The city of Columbus is expected to have an online application for the loans on its website today.
Visit columbus.in.gov for more information.
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