AGENDA DATE: 4/15/2020
TITLE: Business Recovery Fund to Assist Businesses Impacted by COVID-19
SUBJECT/PROPOSAL/REQUEST: Staff is seeking the Board's appropriation of $200,000 to fund the Business Recovery Fund for a Small Business Microloan program
ITEM TYPE: Regular Action Item
STAFF CONTACT(S): Richardson, Walker, Kamptner, DeLoria, Johnson
PRESENTER (S): Doug Walker, Roger Johnson
LEGAL REVIEW: Yes
REVIEWED BY: Jeffrey B. Richardson
BACKGROUND: The strategic plan for economic development, Project ENABLE, was approved by the Board of Supervisors on December 5, 2018. During its development, staff engaged with a wide variety of stakeholders in the community to assess existing economic development programs and identify partnerships that would be critical to advancing its mission. This approach ensured the County’s economic development goals would be complementary and not duplicative of the community’s ongoing efforts.
As a result, Project ENABLE strategically focuses on businesses that earn more than half of their revenues from outside the region (called “primary businesses”), while relying on its partners at the local, regional, and statewide level, to serve consumptive businesses. The Economic Development Office (EDO) works with several different local partners to support the County’s consumptive businesses including the Central Virginia Small Business Development Center and the Community Investment Collaborative (CIC).
Nevertheless, the economic impacts of the COVID-19 pandemic are being felt across the world and it requires broad consideration of all businesses within our community. The uncertainty created by the evolving nature of the public health response and the unknown duration of the public health crisis has led many businesses to significantly reduce or indefinitely suspend operations, as well as furlough or lay-off employees. The response from the County and its economic development partners will play a critical role in how businesses choose to restart operations once the COVID-19 pandemic subsides.
STRATEGIC PLAN: Economic Prosperity: Foster an environment that stimulates capital investments, builds the planned vision and increases tax revenue to support community goals.
DISCUSSION: The COVID-19 pandemic will have dramatic impact on local businesses and likely longer-term implications to the overall local economy. Although federal and state-level agencies are providing unprecedented levels of resources and services for emergency relief (such as the Coronavirus Aid, Relief, and Economic Security Act or CARES Act), staff identified gaps for the business community that will exclude impacted businesses locally.
• Some lenders require all 20% minority owners to be listed on applications
• Applications and qualifying standards are changing regularly
• Some banks are only servicing existing clients
• Lenders set the qualifying threshold standards
• 66-day loan processing timeframe
• Lenders don’t weigh community needs
As a result of these gaps and community needs, staff is proposing a microloan program. This microloan will help impacted businesses restart operations once the COVID-19 pandemic subsides and after state and local emergency orders are lifted.
Many of the small business relief programs at the federal level are focused on the short-term survival of businesses, where the most valuable benefits expire by June 30th. In contrast, the main goal of the Business Recovery Fund is to restore business activity, employment and critical community services in rural areas to as close to pre-pandemic levels as practical.
Additionally, staff is recommending this microloan include consideration to both equity and community needs. Although loan guidelines are intended to be flexible, County staff will direct the CIC to give additional weighting to rural service providers (examples would be daycare, convenience stores, etc.), as well as small businesses that may not otherwise qualify for a small business loan.
In doing so, this microloan program will further a public good and help increase business and business-related tax revenues such as sales tax, meals tax, BPOL, as well as machinery, tools and equipment taxes. Business and business-related taxes reduce the County’s reliance on real property taxes, which are otherwise needed to fund County services. The microloan terms, eligibility requirements, and application process are summarized in Attachment A. The CIC has agreed to administer the application process and manage the loans. The CIC will also provide a report on the overall payment history for the program over the life of the loan fund.
On March 26th, the Economic Development Authority for the City of Charlottesville agreed to contribute $100,000 to this effort. It is expected that this microloan program will allow other partners including nonprofits and private donors to also contribute to the fund.
BUDGET IMPACT:
Staff anticipates little-to-no impact on staff resources as a result of CIC agreeing to administer the program.
$200,000.00 is recommended to be provided from the Economic Development Fund to the Economic Development Authority for the Microloan Program. This funding amount, if approved, will reduce the amount intended to support the Project ENABLE goal related to site readiness and staff thinks this is an appropriate re-prioritization of strategic focus at this time given the circumstances. Appropriation of this funding is noted in Attachments B and C. A budget amendment public hearing is not required for this appropriation pursuant to Virginia Code §15.2-2507 because the amount of the cumulative appropriations does not exceed one percent of the currently adopted budget.
RECOMMENDATION:
Staff recommends that the Board adopt the attached Resolution (Attachment C) to approve the appropriation described in Attachment B.
ATTACHMENTS:
Attachment A: Business Recovery Fund Overview
Attachment B: Appropriation
Attachment C: Resolution