City creates loan program for small businesses

Newly opened Covered Bridge Brewing Group is among local businesses which will be applying for financing under the new program.

The city has set aside $100,000 for small business assistance

Emergency loan and grant programs have launched in both Cottage Grove and other Lane County cities in an effort to provide relief for small business suffering from the economic slump caused by the public health crisis of COVID-19.

“We encourage everyone to share the word, spread it around and get some applications in from Cottage Grove for that funding,” said City Manager Richard Meyers at a July 13 City Council meeting.

The City of Cottage Grove has set aside $100,000 for small business assistance as part of the city’s 2020-21 budget.

Part of these funds will be used as a match for $25,414 from Business Oregon in a grant program and a remaining $74,500 will be loaned through the city’s own loan program.

The grant was established by Lane County and third-party financial institution Community Lending Works, in partnership with the cities of Coburg, Cottage Grove, Creswell, Eugene, Florence, Lowell, Springfield and Veneta. A total of $225,000 has been awarded from Business Oregon to be provided as grants to eligible businesses in these cities. 

An additional $60,000 has been contributed by Lowell, Cottage Grove, Creswell, Florence and Veneta, making almost $285,000 available.

Grants will range from $2,500 to $25,000, based on a formula from the state that accounts for employment size and COVID-19 related impacts.

Businesses with 25 or fewer employees (including sole proprietors and business owners with ITINs) will be eligible, and only those that have been unable to receive federal CARES Act funding, including the Small Business Administration’s Paycheck Protection Program, Economic Injury Disaster Loan Emergency Advance program, or other federal programs for emergency pandemic funding to date.

Businesses are also required to use the proceeds for any business-related operating expenses, particularly to support businesses that were closed as they move into the first phase of statewide reopening.

The pre-registration deadline expired July 13. Eligible businesses who pre-registered will be entered into a random lottery and selected until funding runs out.

Among other stipulations, the grant requires that “historically disadvantaged business owners” are given first opportunity to apply for the loans, which the state defines as Asian, Black, Native American, Hispanic and women business owners.

The City of Cottage Grove has also partnered with Community Lending Works to launch an emergency loan fund for small businesses located within Cottage Grove city limits.

The city has dedicated nearly $75,000 for the Cottage Grove Emergency Business Loan program and loans are available until the fund is fully committed.

“If we have more applications than funding, then there will be a lottery,” said Meyers. “If we have more money than we have applications, then those will get funded and we’ll go back out and ask for more.”

Eligible business to this program must have been adversely impacted by the COVID-19 crisis and generally stable prior to the crisis, though there is no restriction for those who have received CARES Act aid.

Businesses are also required to present an emergency plan which outlines plans for areas such as budgeting, staffing and marketing.

Loan amounts of up to $10,000 will be awarded at a 2 percent interest rate for up to 60-month terms and mandatory monthly business check-ins will occur during the zero-payment period.

This period, in which principal and interest are deferred, makes up the first six months.

From months seven to 12 of the loan term, the principal may also be deferred while interest-only payments are made.

For the remainder of the term, both principal and interest must be paid monthly.

When Cottage Grove city councilors gave the green light to establish the program in May, the question of conflicts of interest among the City Council arose.

During a May 11 City Council meeting, councilors Mike Fleck, Greg Ervin and Candace Solesbee declared conflicts of interest as their organizations or businesses could hypothetically qualify for the loan program. 

Though Fleck said he had no intention of applying for the program, Solesbee said her businesses would.

City Attorney Carrie Connelly weighed in at the time: “I actually believe that Councilor Solesbee has a ‘potential’ conflict of interest because even if she’s planning to apply, there’s no guarantee that she would be awarded. Therefore, I believe that it’s fine that she’s participating [in the discussion],” she said.

Meyers has also explained that third-party stewardship over the funds by Community Lending Works removes bias from the program.

Chrissy Chapman, part-owner of the newly-established business Covered Bridge Brewing Group, hopes to utilize the program to help her business right itself amid the economic uncertainty.

“I think [the program] is imperative to our small businesses making it during a pandemic. Everyone has felt lower sales,” she said. “If we want to keep our small businesses in our small town, we should probably support them in any way that we can.”

Applications are being taken now on the Community Lending Works webpage. For questions or assistance, email [email protected]

The loan application and information about the program is available on the organization’s website at communitylendingworks.org.

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