The City Council approved a lifeline business loan program at its Tuesday, April 21, meeting that will portion out $2 million in City funds in no-interest potentially forgivable loans of up to $15,000 each to eligible stores, lodging and restaurants.
Council members said they want the program implemented as soon as possible to help the City’s local businesses that have been forced to close or vastly reduce their operations due to the coronavirus pandemic.
A resolution with the terms of the program was adopted and outlines how the program will work. The City will reserve $2 million in General Funds for the loans and enter into an agreement with Cal Private Bank, with an office in Coronado, to assist with the loan administration and marketing.
Cal Private Bank is partnering with the City to facilitate a process by which loans can be made quickly to qualified businesses. To provide quick and efficient loan processing, the City will be providing an online application and will be qualifying the businesses “in house.”
The loan terms for three tiers of Coronado businesses are $15,000 for each business, defined as discrete individual storefronts; a maximum loan term of 5 years; zero percent interest with consideration of loan forgiveness depending upon circumstances; no loan to collateral percentage; evidence that a business has applied for federal or state COVID-19 related business assistance; and paid local sales tax.
The Council also agreed to allow Tier 2 businesses to apply 30 days after the Tier 1 businesses and reserved the right to suspend the Lifeline Loan Program if not totally subscribed within two months of initiation.
The City is required to keep a reserve of $350,000 in its existing Cal Private Bank account to absorb processing fees and provide a cushion for electronic loan repayments and money transfers.
Tier 1 businesses number 124 and include those considered to be small, locally owned that generate tax revenue for the City, such as non-formula restaurants and retail sales establishments, hotels, motels and bed and breakfast operations that are non-formula and non-corporate, and movie and performance theaters. Tier 2 businesses are those considered to be small, locally owned that generate sales tax revenue for the City, and are permitted on the second floor per the Orange Avenue Corridor Specific Plan.
The Council agreed to return in 30 days to review the program.