To support small businesses amid the COVID-19 pandemic, the Lubbock City Council voted Wednesday to approve a Revolving Loan Fund Program that will provide financial assistance.
Participating entities in the program, which was voted on during a special-called, virtual city council meeting, will include the South Plains Association of Governments (SPAG), the Lubbock Economic Development Alliance and Market Lubbock, Inc.
John Osborne, president and CEO of the Lubbock Economic Development Alliance, said the LEDA have heard a lot about small businesses in Lubbock struggling due to cancellations resulting from the COVID-19 pandemic.
“Our board for both LEDA and Market Lubbock took up, yesterday, and approved a program, what we’re calling the Support Lubbock Fund,” he said. “LEDA and Market Lubbock, both, are dipping into our reserves and using some excess funds in Market Lubbock related to our downtown area, our grant program there, to put together a million dollars out of each organization into a fund over SPAG, so a total of $2 million that SPAG would help us administer.”
SPAG has a Revolving Loan Fund to help small businesses, Osborne said.
Regardless, Osborne said one issue cities with grant programs are facing is distributing enough money to different entities.
“So, what we’ve actually developed with this program is to really work with our small business community that’s established, that’s been in business at least a couple of years, that are located within the city limits of Lubbock and that have been directly impacted by this pandemic and the economic challenges as a result,” he said.
A tiered system has been set up, and it will allow companies with 2019 gross revenues of at least $100,000 and no more than $5 million to apply for assistance from the program, Osborne said. Companies with gross revenues between $100,000 and $500,000 will be eligible for up to $20,000, gross revenues between $500,000 and $2.5 million will be eligible for up to $40,000 and gross revenues between $2.5 million and $5 million will be eligible for up to $60,000.
“The primary use of those funds will be for working capital,” he said. “We understand that working capital is a bit of a broad base definition.”
Because of this, Osborne said SPAG has been asked to accommodate businesses and see where they fit in the program.
“The terms and conditions actually start as a loan,” he said. “We think this is a very important part of the program, so that we have those companies that are in true need of assistance will have the opportunity to step up.”
Loans from this program will have terms of five years max at a four percent interest rate, Osborne said. One loan will be distributed to a small business, but if a company has taken advantage of the Small Business Administration programs, they still will be eligible for this loan.
The program will act on a first come, first serve basis, and one will need to complete the application and submit certain documents, Osborne said.
The application will go live on the SPAG website and can be downloaded, Osborne said. One needs to return the application and the required documents to firstname.lastname@example.org.
“Once all of that data is in, then they get added into the queue, so they have to have everything in order to be considered by the loan committee,” he said. “I would highlight the fact that there’s a loan forgiveness option on this program, and we think this is a key component to this revolving loan fund.”
Companies will take out a loan and pay interest-only payments from now until the end of the first quarter of 2021, Osborne said. With $25,000, those payments would be about $83 a month.
Principle amounts can be paid beforehand, but the companies are required to pay principle starting the second quarter of next year, Osborne said.
“We will start measure them at the end of the first quarter to look at their 2020 gross revenues,” he said, “and if their 2020 gross revenues fall by a minimum of 35 percent, then they will be eligible for a 50 percent loan forgiveness. If by chance, their 2020 gross revenues fall by greater than 50 percent, we will actually forgive the entire loan, and it will become a grant.”
In addition to this program, other topics regarding COVID-19 cases and testing in Lubbock were discussed during the meeting.
Lubbock City Manager Jarrett Atkinson said the recently developed Lubbock Economic Recovery Task Force is looking at data regarding hospital usage and capacity, new daily cases and active cases.
“As you watch the city’s websites, you see now for quite a lengthy period of time, our hospital usage for COVID patients is really remaining in a very, very narrow spread,” he said. “A very narrow spread. Usually, just a little over 30 beds collective used.”
Capacity in hospitals vary, Atkinson said. Although, in all cases, the delta between COVID-19 use and hospital capacity remains above 650 beds.
Along with this development, Atkinson said daily new cases have been lower this week and travel-related cases have remained flat for 16 days. The number of community-spread cases is increasing very slowly.
Regarding testing, Atkinson said as of Monday, testing capacity is growing at an average of 254 new tests each day. Tuesday, over 300 new tests were booked.
Testing in Lubbock will soon increase due to different factors, Atkinson said.
Along with a new drive-thru testing site being set up Friday at the Walmart located at 114th Street and Quaker Avenue, Atkinson said a new drive-thru testing site will be set up April 29 at the Patterson Library at 1836 Parkway Drive. There are plans to utilize an electronic record system for those wanting to get tested to call or email to fill out paperwork early.
“Taken together, I think you’re going to see our average increase per day on testing start increasing by well over 300 plus per day,” he said. “We’ll remind the council when we start making our efforts to reopen, the on common factor in any of the reopen guidance is the widespread availability of testing. We are already at two times the state average.”
During the next regularly-scheduled Lubbock City Council meeting on April 28, Atkinson said steps and actions to get Lubbock going will be discussed.