To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Kristin Read, Assistant Town Manager
Title
Discussion/Direction: COVID-19 Small Business Support One-Time Grant Program
Body
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Executive Summary
At the April 7, 2020, Town Council meeting, Council authorized the establishment of a one-time pandemic small business grant program, in addition to an alteration to the KIVA crowdsourcing loan program and sponsorship of Colorado Lending Source (CLS) loan program. Both loan programs are being coordinated by the Castle Rock Economic Development Council. A total of $200,000 in Town funds were allocated to the KIVA loan program and $400,000 to the CLS loan program. A total of $200,000 was allocated to the small business grant program, which Town staff is coordinating.
The grant program application was placed online Thursday, April 9, 2020, with a deadline of 5 p.m. Thursday, April 16, 2020. As of Wednesday, April 14, more than 215 applications had been received - most requesting the maximum possible grant amount of $5,000, for a total of more than $1 million in requests. It should be noted that roughly half of the initial 215 applications have been evaluated ineligible under the program criteria, as detailed later in this memo, including nearly 50 being classified so because they are from professional service firms. Still, those businesses and others considered ineligible make strong, compelling cases for why they should receive Town financial support at this time.
One issue is clear - the number of applications that meet program criteria as of the writing of this memo have requests that more than double the amount of funds appropriated to the COVID-19 Small Business Support Grant Program. Seeing these needs, Council may desire to revisit either 1) the program criteria, or 2) the allocation of small business assistance among the various programs mentioned above, in order to provide the appropriate level of grants to Castle Rock small businesses.
Discussion
The webpage for the COVID-19 Small Business Support Grant Program includes the following program criteria:
“Funding priority will be given to small businesses - defined as those with 25 employees or less - that have frequent and/or close customer contacts, and whose business has been negatively and significantly impacted by stay-at-home orders required by the pandemic. Categories of priority businesses include storefront retail, restaurants/food shops, and personal care small businesses (barbers, hair and nail salons, etc.). Franchises located within Castle Rock and whose franchisees also reside within Town are eligible.
Other small businesses will be considered for grants as funds are available, with lesser priority, if they meet program criteria. Ineligible businesses include liquor stores; auto- and construction-related businesses; regional businesses with more than five locations in Colorado; professional service businesses; and nonprofit organizations.
To qualify, a business must have been operating in Castle Rock for a minimum of one year prior to making application. Preference will be given to businesses that collected and remitted Town sales tax during 2019.
Additional program criteria:
• The business must have a physical and publicly accessible location in the Town of Castle Rock that is not based in a residence or coworking space.
• Eligible businesses must provide a statement or other evidence that the business has suffered economic harm (e.g. loss of revenue or income, employee lay-off, etc.) between March 1, 2020, and the date of the application that can be attributed to the COVID-19 pandemic and/or the subsequent State of Colorado public health orders mandating restricted or closed business practices.
• Businesses are required to provide information, via an online application, on how granted funds will be used.
• To be eligible, a business must be in good standing with the Town in regard to Town business licensure and sales tax and use tax returns. The business must further be operating in accordance with applicable laws and registered with the Colorado Secretary of State’s Office.
• The business must meet all established program criteria and agree to provide financial records to support its application upon the Town’s request.
• The business must have applied for a federal SBA loan and provide proof of application.”
A grant review team - consisting of Town staff, and representatives from Town Council, the Castle Rock Economic Development Council and the Castle Rock Chamber of Commerce - plans to meet Friday, April 17, after the agenda for April 21 is initially published, to review and make funding recommendations on the applications submitted. The review team’s recommendations will be published at CRgov.com/BusinessGrants by 5 p.m. Monday, April 20. This agenda item also will be updated by that time to include as an attachment the recommendations.
Since applications began being submitted, staff members on the review team have been analyzing the submissions in accordance with the published criteria. The team intends to present two possible approaches to making grant awards for Council’s consideration. The approaches were developed with the grant program’s current $200,000 budget in mind and, therefore, would likely require refinement should Council decide to shift additional financial resources to the program.
To provide additional context with regard to the two loan programs the EDC is coordinating, as of Wednesday, April 14, the KIVA program had 11 pending applications, representing up to $44,000 of needed Town investment. As of that date, the EDC was still seeking a banking partner to make possible the CLS loan program.
Per previous Council discussions and direction, staff’s goal in coordinating the grant program remains to get funding to the businesses as Council approves as expediently as possible. With that in mind, staff encourages Council to review the program criteria and award recommendations in order to be prepared to provide direction on awarding grants to businesses as determined is appropriate.
It should be noted that, in the interest of time and in appreciation of the available resources, staff has not recommended any dispute process nor cure period for any of the applications deemed ineligible. Should Council wish to provide for such opportunities, staff encourages that direction be provided to that effect.
Attachment
Attachment A: Grant Review Team Award Recommendations (posted on 4/20/2020)
Attachment B: Memo - Small Business Grant Request (added on 4/20/2020)