Small business loan program anticipated to run out of $4.4 million in county funds fast after April 27 launch

County Commission fine-tunes application criteria

Editor’s note: The Sarasota News Leader is providing general reporting on the novel coronavirus to readers for free as a public service.

Image courtesy Economic Development Corp. of Sarasota County

It took about an hour on April 22 for the Sarasota County Commission to fine-tune the criteria for applicants in the Small Business Resiliency Loan Program it approved on April 8. That initiative will use close to $4.4 million in county funds that had been set aside to recruit and retain what Commissioner Charles Hines has called “game-changer” businesses.

With only Hines voting against the final criteria, Dave Bullock, interim CEO of the Economic Development Corp. of Sarasota County, said he anticipated that the program would be launched on April 23. However, the EDC website that morning made it clear that the program’s start had been delayed to Friday, April 24. Later, the EDC move it back further — to Monday, April 27. (The Sarasota News Leader learned of the adjusted date after its email blast for subscribers was completed Thursday night.)

Given the expectations for demand, commissioners indicated their belief that the money would go fast.

As of the morning of April 22, Bullock said that 631 people had signed up with the EDC to receive notices as soon as the program goes live.

He told the commissioners he would have 20 people prepared to begin reviewing applications at the point of launch. Many of them are volunteers, he noted, including representatives of the Manasota SCORE program, which provides “education and mentoring on a wide range of business issues,” its website explains.

Bullock praised the Manasota SCORE volunteers for their “super effort” already in assisting the EDC with the loan program details.

Just as he did with the April 8 motion that approved use of the county’s Economic Incentive Fund for the loan program, Chair Michael Moran passed the gavel to Vice Chair Alan Maio to make the April 22 motion that tweaked the criteria.

To be eligible, a business will have to provide copies of its Sarasota County business tax receipt, with a county address attached to it, for the past three years; it also must provide the EDC a copy of its application for the federal Paycheck Protection Program — even if the company was unable to submit that form to a bank for processing before the federal money ran out. Additionally, each company must fill out online what Bullock described as a simple county application for a loan through the resiliency program.

And the funds will be restricted to businesses with fewer than 50 full-time employees, Moran emphasized, although Bullock had proposed that those with no more than 50 be considered.

In making the motion, Moran repeated that point.

Full-time means 40 hours of work or more a week, Bullock pointed out.

No loan can be exceed $25,000, and when the Economic Incentive Fund money has been exhausted, no other loans will be available through the program.

These are the organizations providing reviewers to assist the EDC. Image courtesy Economic Development Corp. of Sarasota County

On April 22, the commissioners also agreed to exclude nonprofit organizations from the pool of applicants. Commissioner Christian Ziegler talked of a discussion he had had Kelly Romanoff, innovation and impact officer of the Charles & Margery Barancik Foundation. She told him that nonprofits can seek help from community foundations. As Ziegler put it, referring to the foundations, “I think that they’re going to be kind of picking up the slack, if you will.”

However, sole proprietors, self-employed persons and “gig” workers who can produce copies of county business tax receipts for at least three years will be eligible, at Bullock’s recommendation.

Moran’s motion further called for adding three more categories for use of the loan funds than originally proposed, which was another EDC suggestion. Along with covering employee salaries and making utility and rent or mortgage payments, the money may be used for insurance, marketing and the cost of goods for business operations.

Additionally, “There would be a personal guarantee to all owners, shareholders or members of any type [involved with the company applying for the loan],” Moran said. People who accept the loans, Moran emphasized, “better be ready to pay [them] back.”

These are points the commissioners considered in deciding whether to require a personal guarantee for the loans. EDC Interim CEO Dave Bullock brought them up during the April 22 discussion. ‘Irma’ refers to Hurricane Irma, which passed through the state in September 2017. The bridge loans were provided by the state. Image courtesy Economic Development Corp. of Sarasota County

Commissioner Nancy Detert initially argued against the personal guarantee, saying that that requirement was “like throwing [applicants] a brick instead of a life preserver.” However, before the vote, she told her colleagues she would support Moran’s motion. The businesses the county helps, she pointed out, will be putting the money back into the community, which would help other businesses.

Finally, as the board members agreed on April 8, 35 slots will be left open for childcare facilities, as long as those are not nonprofits, Moran noted.

When Detert voiced concern about background checks on the daycare center applicants, Bullock explained that the EDC team would be working with the Early Learning Coalition of Sarasota in the event questions arise. That organization’s executive director, Janet Kahn, has offered to be a resource for the EDC, Bullock said.

The reviewers will check immediately to ensure that each facility seeking a loan is licensed, he pointed out. Further, he said, such applicants “cannot have significant safety and health-of-the-child violations.”

More details and discussion points

These are businesses that do not have to have business tax receipts (BTR) in the county, so they will not be eligible for the loan program. Image courtesy Economic Development Corp. of Sarasota County

Other facets of the program criteria set forth on April 8 remain intact with the April 22 action: No payment is necessary for the first year of a loan; subsequently, beginning in June 2021, the business must pay 3.5% interest per year to keep the funds for an extra three years. If 80% of the loan principle is repaid prior to June 1, 2021, the outstanding 20% will be converted into a grant and the remainder of the borrower’s payment obligations will be forgiven.

Each applicant also must attest to the fact that he or she is dealing with a hardship related to the COVID-19 public health emergency, Bullock noted.

“We are still on track for [May 1] to get this money on the street?” Moran asked Bullock before the vote.

“We will start sending reviewed and qualified applications over to the county within hours of receiving them,” Bullock replied.

Rob Lewis, director of governmental relations for the county, added that his staff is training extra people to assist with processing the applications after the county receives them. “We’re making every endeavor to make sure we meet the May 1 deadline,” Lewis told Moran.

This slide provides details about the processing of the applications. Image courtesy Economic Development Corp. of Sarasota County

In announcing his decision to oppose the program — as he did on April 8 — Commissioner Hines, the longest-serving of all the board members — explained, “This is a pool of money that we’ve really set aside to be a big game-changer, to make a difference in our county, [including] career creation. My issue with this is that this money’s going to be gone in the first 15 minutes of the application process.”
Moreover, Hines continued, he believed the program would create a lot of problems with which the commission would have to contend in the future. Among them, he said he believes complaints will be lodged that applications were pulled because the reviewers found the applications did not meet all the criteria, though the business owners will be able to prove later that the reviewers erred. Still, Hines said, since he is stepping down from the commission in November because of term limits, he likely will not have to deal with such problems.

Former Longboat Town Manager Dave Bullock is interim CEO of the EDC Image courtesy of the town

During his presentation, Bullock explained that the reviewers will check whether an applicant has been through bankruptcies and has been charged with felonies — “all those types of things that give insight into the applicant’s ability to repay the loan.” Further, the reviewers will verify the status of each company’s business license — as indicated by the three years of business tax receipts; and they will examine the federal tax forms each company must provide for the past three years to qualify for a loan.

If any problems are noted with an application, Bullock continued, “That reviewer then will remove [it] from the queue, and then it [will be] assigned to a group of people who contact the applicants.”

Bullock acknowledged that any business whose application is removed from the queue likely will lose out on the opportunity for one of the loans.

“I agree with you 100%,” Hines responded. If the application is removed from the queue, then the owner is “going to miss this opportunity.”

Bullock did explain, “The applicant would receive emails along the way, as the application moves through the process.” Therefore, he added, if the application is pulled because of questions or concerns, the applicant would be notified.