Modesto adds $500,000 to loan program for small businesses reeling from pandemic
Modesto has an additional $500,000 to lend to small businesses reeling from the new coronavirus and will spend several hundred thousand more dollars helping others — including tenants who can’t pay their rent, nonprofits and homeless shelters — that have been hit hard by the pandemic.
The city will pay for this from the nearly $1.69 million it has received from the federal Coronavirus Aid, Relief, and Economic Security Act, the more than $2 trillion stimulus package passed by Congress and signed into law by President Donald Trump in March to help families, business, public health, states and local governments deal with the the pandemic.
For instance, Stanislaus County was awarded $96 million from the CARES Act.
The City Council on Tuesday approved spending Modesto’s $1.69 million and increased the total amount it has to lend to small businesses from $250,000 to $750,000 as part of the city’s small business assistance program. The council approved the program April 14 with the initial $250,000.
The loans are for two months of a business’s operating expenses or $10,000, whichever is less. The loans are for businesses with fewer than 50 employees. The loans are low interest and can be forgiven. Lenders, investment firms, insurance companies, nonprofits, chain stores and home-based businesses are not eligible.
Jessica Narayan, the city’s community development manager, said in an interview that 128 small businesses had applied for a loan as of Monday, seeking $1.1 million in funding. The city is reviewing the applications and expects to start making loans within two weeks.
The assistance program also lets qualifying small businesses defer paying their city utilities bills, mil tax (a tax businesses pay the city) and business license fees for 90 days from April 30. More information about the program can be found at modestogov.com/sbap.
Modesto also will spend its CARES Act money by providing $250,000 to emergency shelters and homeless outreach efforts. Narayan said homeless shelters report they don’t have enough staff and are paying overtime and hiring temporary workers. She said the city money can help with that as well as sanitation supplies and personal protective equipment for shelters and outreach workers.
Modesto renters can get help
The city also will spend $200,000 to help people with their rent and utilities bills. Narayan said the city will provide the $200,000 to nonprofits that work with renters. And Modesto will provide nearly $95,000 to help local nonprofits. Narayan said the details of that assistance needs to be worked out.
The $1.69 million is from the U.S. Department of Housing and Urban Development’s community development block grant program, which helps low- and moderate-income people, and HUD’s emergency solutions grant program, which helps homeless people and people at risk of being homeless.
A business will need to show it will create or retain one low- or moderate-income job for one year as part of qualifying for a loan to meet the CDBG requirement of helping low- and moderate income people. A retail clerk or restaurant server are examples of jobs that could meet that.
City spokesman Thomas Reeves said the loans help small businesses keep their doors open and their workers drawing paychecks.
Modesto will spend about $344,000 of its $1.69 million on administrative costs, including planning and oversight, as well as producing the required documentation. And Modesto will repay itself the $250,000 it used to start the small business loans from the $1.69 million.
Stanislaus County grants
Narayan said the CARES Act allocated $5 billion nationwide for the community development block grant program and $4 billion for the emergency solutions grant program. She said much of that money has not yet been allocated so it’s possible Modesto could receive additional funding.
She also said Modesto could increase funding for the small business loan program based on demand and could work with the county to help small businesses.
Stanislaus County is providing grants of as much as $10,000 to help small businesses during California’s stay-at-home order and the other measures being taken to stop the coronavirus, but which also have resulted in layoffs, furloughs, business closures and other severe economic hardships.
This story was originally published May 1, 2020 at 10:35 AM.
