Columbus officials are putting together a loan program for small businesses located within the city limits to help them obtain financial support while recovering from the COVID-19 pandemic.
The Columbus Redevelopment Commission and Columbus City Council will consider approving the Columbus INvigorate program next week, which would provide a $1 million loan fund from city funds administered through the Administrative Resources Association, a nonprofit governmental association. The program is being described as “a loan program for small businesses in need.”
The loan 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.
If approved, the program would offer businesses within the city limits that have $2 million or less in gross receipts and under 50 employees the opportunity to apply for a loan in a range from $5,000 to $25,000, said Mayor Jim Leinhoop and ARA Executive Director Eric Frey.
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Cindy Frey, executive director of the Columbus Area Chamber of Commerce, said an estimated 400 businesses within the city limits could potentially qualify for the new loan program, based on census figures.
A seven-member loan committee through ARA made up of local individuals with expertise in the banking industry would evaluate applications. The committee is already formed as it is used to approve federal small business loans through a separate program, Eric Frey said.
The city will have a member on the committee, Robin Hilber, who is assistant director in the city’s Community Development program, Lienhoop said.
There would be a six month deferral of interest and principal payments on the three-year loans, which would not require collateral but would require a personal guarantee from applicants, Lienhoop said. Interest rate after the sixth month deferral would be 1 percent.
The program will be considered by the redevelopment commission at 4 p.m. Monday and the city council at 6 p.m. Tuesday, both meetings at city hall which are live-streamed on the city’s website.
If the two boards approve the loan program, a link to apply for the loans could be on the city’s website as soon as Wednesday, Lienhoop said. Because of the continuing social distancing guidelines, applicants will be asked to submit applications electronically.
The application period will extend to April 30 for small businesses, and all those applications will be considered as being submitted at one time, Lienhoop said. Applications after April 30 would be considered on a first-come, first-serve basis, he said. The money may be used for any ordinary business expense such as paying employees, rent, utilities or other expenses.
The program is designed to provide help to the numerous small businesses around Columbus that have closed during the stay-at-home state order issued by the state, and those that have substantially cut back their restaurant businesses to takeout and delivery as a result of the order.
“The city, over the last 10 years, has put a great deal of time and effort to create a downtown that is attractive and also is attracting retailers and restaurants, and we have a pretty good group,” Lienhoop said. “We want them to reopen when this crisis is over.”
Lienhoop added that city officials also realize the pandemic’s effects are not just limited to the downtown area, and that small businesses of all types throughout the city need assistance to keep going until the economy is reopened.
Small businesses interested in applying should expect to put together financial documents needed for any type of loan in anticipation of applying, Lienhoop said. The loan committee will consider documentation of declines in revenue for March of this year as compared to March 2019.
“We want to try to identify businesses most affected by this,” Lienhoop said.
Not everyone who applies for a loan will receive one, and not everyone who seeks the full amount will receive that, Lienhoop cautioned.
“That’s why we wanted to have an independent decision-maker for those decisions,” Lienhoop said. “We want this done in a fashion that is equitable.”
Details on how quickly the loans will be distributed are still being worked out, but as the loan committee makes decisions, Eric Frey said he anticipated once the paperwork is completed for electronic payment to the applicant, and the same process for repayment, the money could be in the business’ bank account in a matter of days following a committee decision, Frey said.
The city money for the loan program is coming 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, Lienhoop said. The $350,000 in capital improvement funding will come from deferring that amount from planned projects in 2020 to next year.
Lienhoop said it is unknown whether the $1 million will be enough for the need in the small business community at this time.
“We really don’t have a way to estimate that,” Lienhoop said. “It’s possible that people will tell us that through the application process.”
The mayor said the city does realize while the need is real in the small business community, the city also has some “real fiscal constraints.”
“We want to do whatever we can to help, but we have to be realistic about it,” he said.
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The city of Columbus is livestreaming its public meetings from city hall from its website.
To access the livestream, go to columbus.in.gov/ and click on the video icon for the meetings to stream on your computer.
The Columbus Redevelopment Commission meets at 4 p.m. Monday at city hall.
The Columbus City Council will meet at 6 p.m. Tuesday at city hall.
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Members of the Columbus INvigorate small business loan program committee that will consider applications are:
- Rita Wilder, certified public accountant
- Charlie Farber, former banker
- Fred Nerz, SCORE
- Robin Hilber, Columbus Community Development Department
- Kari Story, Accounting Service
- Tom Doud, businessman and former banker
- Gil Palmer, businessman/insurance
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