South Boston’s small businesses have a chance to get the financial help they need during the COVID-19 pandemic.
Town manager Tom Raab in a Monday evening council work session announced the town’s establishment of a $250,000 small business emergency loan fund in partnership with Destination Downtown South Boston.
Council unanimously voted to approve the emergency loan fund. They also unanimously voted to limit funding eligibility to businesses with 30 or fewer employees.
Businesses applying for funding must have a 2020 business license in the town of South Boston and cannot operate a corporate or chain store.
“I think this is a good way to serve South Boston and move forward,” Raab said. “Funding is available on a first-come, first-served basis. Application does not guarantee approval.”
Council member Bob Hughes voiced his approval of the emergency loan fund to help small businesses that have been hit hard financially during the COVID-19 pandemic.
“This is, in my opinion, a really positive endeavor,” Hughes said.
Each business selected will be eligible for a loan of up to $5,000. The loan will have a 0% interest rate, and the loan term will be 36 months from the date of closing. No payments will be due for six months after the closing date.
A five-member small business recovery response team will review the applications and determine what businesses will receive a loan. The board members are Raab, Tamyra Vest, executive director of Destination Downtown South Boston, Lin Hite, regional director of the Longwood Small Business Development Center, South Boston businessman Stanley Jeffress and a fifth member to be appointed based on Mayor Ed Owens’ recommendation.
After his announcement of the loan fund at Monday’s meeting, Raab shared with council information about the funding sources making the small business emergency loan fund possible.
“Back in September 2013, the town council authorized the use of $185,0000 towards new brick warehouse construction. They are paying that back…and $115,000 is still owed. They are refinancing and want to pay that off,” Raab said. “Destination Downtown South Boston has received a $25,000 grant, and we are partnering with them on this. We have $23,500 in council contingency, and we have $83,400 left in budget contingency. It’s $3,100 short, and I will find that $3,100 somewhere in our budget to make the $250,000.”
Each business applying for a loan will be required to explain why they need the funds, how they plan to use the funds, and what economic impact the COVID-19 pandemic has had on their business. Businesses remaining open during the public health crisis as well as those that have temporarily closed are eligible to apply for a loan.
Acceptable uses for the loan include rent, payroll, utilities, inventory purchase and marketing. Unacceptable uses include personal use, savings or investment, or purchase of non-essential items.
Owens proposed taking a vote on the parameters of the size of businesses that would be eligible to apply for a loan.
“Let’s make a decision tonight what size the company is,” Owens said.
Finance committee chair Bill Snead suggested a cap of 15 employees, while councilman Winston Harrell recommended a cap of 50 employees.
Hughes suggested capping the number of employees at 30, and council agreed.
Businesses interested in apply for the small business emergency loan fund should apply on the town’s website, www.southboston.com, or on the Destination Downtown South Boston website at www.downtownsobo.com.