To: Honorable Mayor and Members of Town Council
From: Kristin Read, Assistant Town Manager
Title
Discussion/Direction: Additional COVID-19 Small Business Support Grant Program (CARES act reimbursement eligible for business COVID costs and business interruption)
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Executive Summary
In April, Town Council authorized a one-time pandemic small business grant program. A total of $266,500 was allocated to 96 local small businesses via the program, which Town staff coordinated.
While it was envisioned the grants would be a one-time-only offer, the pandemic and associated business interruptions continue to impact the community. As such, Council may wish to consider offering another round of grants to support small local businesses heading into the fall. Staff outlines an option for achieving this objective within this memo.
Discussion
Staff would envision the criteria for any additional grant program would remain mostly consistent with that of the prior program, which was as follows, with minor edits and one proposed exception suggested as noted:
“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 interrupted 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.
• 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 - in essence, to submit to a program audit - upon the Town’s request.
• The business must have applied for a federal SBA loan and provide proof of application. (This would not need to be provided again if the business furnished this as part of an earlier grant application.)”
One criteria would be changed, based upon the updated timing of any future program:
• Eligible businesses must provide evidence that the business has suffered interruptions to include a loss of revenue totaling at least $5,000 that can be attributed to the COVID-19 pandemic when comparing May-August 2020 to May-August 2019.
If a business timely submits an application compliant with all criteria, it would be awarded a $5,000 grant using Town funds. Town staff anticipates expenses associated with these grants would be reimbursable via the federal CARES Act. Based on previous application volume and eligibility determinations, it could be anticipated that at least 100 local businesses may qualify and be recommended for a grant, so this program could require $500,000 or more in financial resources.
As with the earlier grant, staff would envision that 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 - would meet to review and make recommendations regarding the applications submitted. A draft application, which is similar to the earlier application but has been streamlined to focus on revenue loss, is included in Attachment A.
If Council approves a grant program tonight, staff recommends the following program schedule:
• Tuesday, Sept. 8 - Grant applications open
• Friday, Sept. 25 - Grant applications close at 5 p.m.
• Tuesday, Sept. 29 - Review team meets to consider applications and form recommendations
• Tuesday, Oct. 6 - Town Council considers recommendations and awards grants
• Mid-October - Granted funds are mailed to receiving businesses
Like with the earlier grants, the review team’s recommendations would be published at CRgov.com/BusinessGrants by 5 p.m. Thursday, Oct. 1, so businesses can review the recommendations ahead of the Council meeting and provide any comments.
Also like with the earlier grants, staff would not recommended offering any formal 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.
The proposed grants would complement a program Douglas County is offering to reimburse businesses with 100 or fewer employees for up to $10,000 in costs for personal protective equipment or structural changes related to COVID-19. Castle Rock businesses are also eligible to apply for that program, the initial deadline for which is September 15.
Attachment
Attachment A: Draft Grant Application