Help available for small businesses hurt by pandemic
Published 9:00 am Friday, April 17, 2020
- Matt Hamilton/Daily Citizen-NewsJeremy, left, and Mike Robinson look over construction plans for a jail at Robinson Door & Security.
DALTON, Ga. — A new lending program for small businesses adversely affected by the new coronavirus (COVID-19) pandemic has already exhausted its funds. And while Congress grapples with another bill that could re-fund the payroll protection loan program, the City of Dalton plans to use $150,000 of the $255,543 in Community Development Block Grant money it received under the CARES Act that was signed into law by President Donald Trump in March for small business loans.
Community Development Block Grant is a federal Department of Housing and Urban Development (HUD) program targeted at urban areas with low incomes and high poverty that funds anti-poverty efforts, infrastructure construction and programs to reduce blight.
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Dalton Chief Financial Officer Cindy Jackson said the goal of the city’s loan program is to help small businesses inside the city affected by the pandemic and efforts to slow the spread of the virus.
“The intent is to avoid job loss caused by business closures related to social distancing by providing short-term working capital assistance to for-profit entities with 50 or fewer employees to enable retention of jobs held by low- and moderate-income persons,” she said. “Businesses will complete an application, and funds will be awarded based on the application. It is a loan that will be forgiven over time based on retention of employees. The forgiveness period to be determined.”
City officials will also allocate $50,000 from the city’s 2019 Community Development Block Grant funds to the small business loan program.
The loans will be interest free. The city is working with HUD to determine the length of the loans and the forgiveness terms.
The city will hold a public review meeting via conference call today at 10 a.m. on its plans for the CARES (Coronavirus Aid, Relief and Economic Security) Act block grant funds. Officials will be taking questions from the public. To take part, call (872) 240-3212 and enter 378-983-045 or login at global.gotomeeting.com/join/378983045.
The city also plans to allocate $54,434 for food delivery and $51,108 for administrative costs and compliance monitoring as well as required legal ads.
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Dalton’s Community Development Block Grant program is administered by its Finance Office along with BluLynx Solutions of Atlanta, which receives $62,487 annually from the city for Community Development Block Grant services.
“The administrative cost is reimbursable to the city finance staff and consultant based on actual hours spent on implementation, administration and monitoring of the grant award and it’s sub-recipients,” said Jackson.
Dalton businessman Mike Robinson received one of the CARES Act payroll protection loans, and he said it has already had a big impact on his business.
“This loan gives Robinson Door & Security a fighting chance to make it through these difficult times,” he said. “It will keep employees in our workforce for the better part of two months. There’s 22 or 23 families that depend on us.”
Robinson said Robinson Door & Security is “construction-related business that supplies doors and door hardware primarily to construction companies, governments and institutions such as hospitals.”
“We’ve been around a long time, but we’ve only recently given it that name because it is more descriptive of what we are dong,” he said. “I have another business that people may be more familiar with, A-1 Lock & Security. That’s the retail side.”
Robinson said the pandemic and the slowing of the economy caused by all of the businesses that have been shut down to slow its spread “makes it a lot more difficult to keep cash flow at a normal amount and pay our bills on time.”
“This loan is really aimed at our employees, so that we can continue to pay their salaries,” he said. “We’ve pledged to do that.”
Robinson credits his son Jeremy and wife Jerrilyn, along with Mitch Sanford, president of First Bank of Dalton, with helping him secure the loan.
Sanford said the loan was aimed at businesses with up to 500 employees to allow them to keep those employees working.
“It’s a two-year loan, up to $10 million, with a 1% interest rate,” he said. “The payments are deferred for the first six months. The biggest thing about this is that up to 100% of the loan can be forgiven, making it essentially a grant.”
Sanford said that if at least 75% of the loan is used for payroll and the other 25% is used for specified purposes such as rent, utilities and interest payments on loans taken out prior to the pandemic, the federal government will forgive the loan.
The CARES Act provided $349 million to fund the payroll protection loan program, which was exhausted earlier this week. Congress is looking at providing additional funds for the program, but so far Democrats and Republicans remain far apart.
The GOP and President Trump want a bill that would just add more funds for the program. Democrats want funding for other projects. In addition, Democrats have said the program should be opened up to community development financial institutions, which serve economically-distressed areas.
Small businesses can also apply for an economic injury disaster loan of up to $2 million to cover operating expenses the business could have covered if not for the pandemic. Those that apply can get an advance of $1,000 per employee up to $10,000.
Business owners interested in one of these loans can find out more, including how to apply, at the University of Georgia’s Small Business Development Center website: www.georgiasbdc.org/.