To: Honorable Mayor and Members of Town Council
Thru: David L. Corliss, Town Manager
From: Kristin Read, Assistant Town Manager
Title
Discussion/Direction: Additional COVID-19 Small Business Support Grant Program
Body
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Executive Summary
At the September 1, 2020, Town Council meeting, Council authorized a second-round COVID-19 Small Business Support Grant Program. The program application was online from September 8 to 25. Fifty-four applications were submitted during that time.
A team of staff members and community partners from the Castle Rock Chamber and Economic Development Council have reviewed the applications against the approved criteria and is recommending that Council award 34 of the businesses each a $5,000 grant.
Discussion
As part of its approval of the second-round grant program, Council approved the following 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 interrupted 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.
• 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.)”
• 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.
Council’s program approval established that if a business timely submitted an application compliant with all criteria, it would be awarded a $5,000 grant. The grant review team conducted its review of the applications on September 28 and on October 1 notified businesses of the recommendation regarding their application, notifying applicants of the opportunity to provide public comment at tonight’s meeting.
In evaluating the applications, the review team did not audit the financial information provided. Rather, the team took at face value the businesses’ stated financial losses and verified that they had supplied supporting documentation, should an audit of any application be desired. Further, no formal dispute process nor cure period has been established relative to any applications the review team has deemed ineligible. Staff requests that Council provide any desired direction regarding these aspects of this process as part of tonight’s discussion.
Ten of the businesses recommended to receive grants would be first-time recipients from the Town, while the remaining 24 received grants during the first-round program. Those grants ranged from $500 to $5,000, as indicated in the attachment, and were based upon the businesses’ priority status and sales tax generation level. Those considerations were not reviewed with this round, which had more of a “pass/fail” approach - if all criteria were met, an award of $5,000 was recommended. For comparison purposes, 241 applications were submitted during the first-round grant program, and 96 businesses were awarded grants totaling $266,500.
If approved this evening, staff anticipates approved businesses to receive their grants within the next couple of weeks. With 34 grants recommended, the Town’s total outlay on this round of grants would total $170,000. Town staff anticipates this expense would be reimbursable via the federal CARES Act, as was the Town’s earlier grant program.
Worth noting is that this program does not include any payback provisions, should the business close or become noncompliant with the grant criteria after tonight’s approvals are made. A small number of the businesses awarded grants in April’s first-round program have closed since those grants were made, and staff believes it’s important to publicly note and discuss this aspect as desired.
Attachment
Attachment A: Grant Recommendations