Struggling Manhattan businesses will be eligible for up to $20,000 in certain cases as funds permit through a program unanimously approved Tuesday night.
City Commissioners via Zoom agreed to source half a million dollars from the existing $4 million economic development fund balance to provide a lifeline for businesses amid widespread economic hurt and store closures due to the COVID-19 pandemic.
“All the businesses that I’ve spoken to are devastated and whatever we can do to help — it falls on us,” says Mayor Usha Reddi. “This won’t take care of all of their needs, but hopefully they’ll have resources to move on and sustain themselves.”
Manhattan will provide the funds as a loan to the Manhattan Area Chamber of Commerce, which will create a loan committee including city staff representation to assess applications and award loans to Manhattan businesses whether they are Chamber members or not. The Chamber will repay the money in full over a three to four year period.
“We’re going to try to be as neutral as possible and evaluate it based on the criteria,” says Chamber President and CEO Jason Smith. “The criteria will be: do you have an expense that we believe will inhibit your ability to survive long-term, is that a need that’s a short-term need and that can’t be addressed using some other program, and that you’re in the city limits.”
The loans are divided into three tiers for businesses that meet the above criteria. Of those that do, all will be eligible for up to $5,000, those that did not qualify for Kansas’ HIRE program or some other federal business assistance program can receive up to $10,000 and “primary” large employers that export more than three quarters of its goods or services outside of the city can receive up to $20,000. Repayment will take place over 36 months after a four month period with no payments and 0 percent interest.
“We’ve got to take our economic development money and save as many of our local businesses as we can so that they’re ready to re-open in a couple of months from now or whenever it is,” says Mayor Pro Tempore Wynn Butler. “We’ve got to give that a shot.”
Smith anticipates that most applicants will be for the loan up to $5,000, but says that they won’t just be giving out the entire amount. He says the funds are intended to be expense assistance, not revenue replacement, and that funds will be directed toward specific business costs or bills.
“If it’s approved, then we will fund the amount of that expense,” says Smith.
Smith says the funds will be a bridge for companies stay afloat as they seek additional state and federal assistance that the city has no way of matching. Part of the application process will ask business owners which programs they have applied for and assist those who have not sought such assistance or were unaware of them in getting those applications underway.
“The mountain of evidence is there that this is needed,” says Commissioner Aaron Estabrook.
Except for primary employers, who must retain 80 percent of their employees, the loans are not contingent on maintaining a certain percentage of their payroll.
“Five employees is a quarter of a million dollars a year,” says Smith. “$5,000 is not enough to make a change in that decision one way or another.”
Commissioners also deliberated on whether locally-owned and operated businesses should receive higher priority over chain stores and corporate franchises.
“There are places with corporate management or the model of a local franchisee and then those locally-owned businesses,” says Commissioner Linda Morse. “And I think the locally-owned businesses would be interested in competing and not have the big guys take all the money.”
Smith responded that due to his anticipation that the majority of applicants would be seeking the lower tier loan, larger companies with more capital on hand would have a harder time justifying that an expense in the $5,000 range would be an immediate threat to their continued operation.
The Chamber would also be responsible for pursuing collection on the loans, with city assistance as necessary. Commissioner Mark Hatesohl said they should not operate under the assumption all of the loans will be re-paid in full.
“I’m emotionally expecting a couple hundred thousand of it or more to probably go uncollected simply because there’s nothing in any of these federal, state or other bills to really make up for the fact that there’s been no income to those businesses for a couple months.”
The economic development fund is derived from a voter-approved half cent sales tax expiring in 2022. The sales tax is a Riley County tax that is divided between the county and the cities within its bounds — but Manhattan crosses the line into Pottawatomie County, businesses in which have not paid into the fund though they are in the city limits. Nothing in the criteria prohibits such businesses from seeking the loans, but city officials say remaining funds from the 1994 city-wide sales tax that included Pottawatomie County companies could be diverted for the program for such businesses.
Reddi also says outreach will be vital as part of the program in order to ensure the process is fair and equitable.
“We don’t want the [businesses]that have people in the know to get all of the money first,” Reddi says. “There are a lot of people that are in their little silos and are just struggling because they weren’t eligible for anything else and they may not even know we’re having this discussion this evening.”
Commissioners left the door open for the possibility for additional similar programs in the future depending how the situation progresses in the city and nationally. The Chamber hopes to work through applications within two day periods and will begin work immediately to convene its loan committee and start the process.
Online applications can be found at the Chamber website, Manhattan.org.
Originally posted at https://1350kman.com/it-falls-on-us-manhattan-to-provide-500000-for-business-loans/
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