Item 11 - Small Business Bridge Loan ProgramApril 7, 2020, Item #11 M EM ORAN DLJ M City of Poway DATE: TO: FROM: SUBJECT: Summary: April 7, 2020 Members of the City Council Steve Vaus, Mayor Small Business Bridge Loan Program As a community, Poway has always come together in the face of every challenge we've met. Now, with the Coronavirus wreaking havoc around the world we must come together again to protect and support our friends, neighbors and local businesses. In the interest of protecting and supporting local businesses and jobs I propose we create a loan program -Poway Emergency Assistance Recovery Loans (PEARL) -to help small businesses get back on their feet after the health emergency has passed. Numerous decisions about such a program need to be made -types of businesses that qualify; loan amounts and terms; funding source; and others -and I encourage Council's input and/or direction to staff to create the PEARL program. Of course, the federal and state governments have long-standing disaster loan programs in place and others are developing grant and loan programs to help businesses survive this crisis. Such programs are evolving quickly, and not all details are known at this time. Attached is a chart with various loan programs and a description of the loan terms. The purpose of Poway's PEARL program would be to complement existing loan programs and to provide a financial bridge to businesses to survive the current emergency. Recommended Action: Mayor Vaus is requesting Council's input and/or direction to staff to create the PEARL program. Attachments: A. Loan Program Table Reviewed/ Approved By: Wendy Kaserman Assistant City Manager 1 of 2 Reviewed By: Alan Fenstermacher City Attorney Approved By: City Manager
2 of 2April 7, 2020, Item #11 Lender Program Description Loan Amt Interest Rate Repayment Term Ellglbllty
• Business License
• Proof in business 6 months+ City of San Small Business Relief Fund Small business grants and forgivable loans $10,000-$20000 2.50% deferred payments • Proof of economic hardship Diego for 6 months. • not be a chain store, not for
profit or illegal act ivity
• no outstanding citv violations
• Tier 1-Independently owned,
mandated by government action
• $10,000, 0% int repaid or decree to close or significantly
within 180 days alter activity.
• up to $25,000, 1.5% int. • Tier 2 -Independently owned,
if repaid w/in 6 mo ., 2.5% can demonstrate business has
City of San COVID-19 Business Sustainability Short term business loan program $10,000 -$50,000 int. if repaid within 1 year various been significantly affected but has
Marcos Program • $25,001 -$50,000, 2.5% not been ordered to alter business
int w/in 180 days, 3.0% practices .
w/in 1 year, 3.25% w/in 2 • Tier 3 -Part of a national and/or
years. Priority 10+ regional franchise, mandated by
employees largest loans government action to close or
significantly alter activity.
• Fo r-profit, less than 250
CDC Small Emergency Relief Working Capital Businesses impacted by COVID-19 that
Variable Rate : Prime+ 10 years fully
employee small businesses whose
Business need money to cover payroll, rent or up to $150,000 operations, revenue and staffing
Finance Loan mortgage, utilities, insurance and more . 2.75 to 6% amortized have been disrupted due to COVID
19.
• For-profit, less than 250
CDC Small Bus inesses impacted by COVID-19 that employee small businesses whose
Business Emergency Relief Microloan need money to cover payroll, rent or up to $50,000 Variable Rate Prime+ 1% 5 year term with 10 operations, revenue and staffing
Finance mortgage, utilities, insurance and more . year amortization have been disrupted due to COVID
19 .
Lender Program Description Loan Amt Interest Rate Repayment Term Ellglbllty
U.S. Small Loans to small businesses, small agricultural Business Economic Injury Disaster Loans (Ell cooperatives, and most private non-profit 3 .75% 30 years Less than 500 employees Adamin-organizations istration
U.S. Small Cash-flow assistance through 100 percent
Business Paycheck Protection Program federally guaranteed loans to employers $10M 4% on portion not forgiven 10 years Less than 500 employees Adamin-who maintain their payroll during this
istration emergency
State of CA The Disaster Relief Loan Provides loan guarantees for small business $20 M loan with $1 negotiated 7 years Less than 750 employees Guarantee Program borrowers in declared disaster areas M guaranteed
State of CA The Jump Start Loan Program Loans to low-wealth entrepreneurs in $500-10000 negotiated 5 years No paramaters
declared disaster and emergency areas .
Information on these and other resources can be found at: https ://poway.org/1030/Coronavirus-COVID-19-Updates