ADMINISTRATION - Erik Thorvig, Community Development Director
Title
ESTABLISH SMALL BUSINESS GRANT PROGRAM RELATED TO COVID-19
Background
Cities across Minnesota are certifying their eligibility to receive federal Coronavirus Relief Fund (CRF) distributions. The fund, created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is designed to provide economic help to entities struggling because of the COVID-19 pandemic. The City of Blaine is eligible for approximately $5 million in funding.
City staff has been identifying various uses for the funds as it relates to the requirements set forth by the federal government. The city has also retained a consultant to assist in administering and providing guidance in the use of funds. Various uses of funds will be discussed by the city council over the next several weeks.
One of the eligible uses of funds is providing grants to small businesses that have been impacted by the COVID-19 pandemic. Given the urgency to assist businesses, staff is proposing to establish criteria for a small business grant program as a first step in the overall spending of funds.
Anoka County and most cities within the county are in the process of establishing grant programs. Anoka County is allocating $5 million in business grants and $1 million in non-profit grants. Staff is recommending to dedicate $500,000 to the small business grant program with $250,000 made available immediately, and reserving $250,000 for a second round of grants later in the fall.
Staff has reviewed the State of Minnesota, Anoka County and programs from other cities and have attempted to mirror criteria in the proposed program for Blaine. In general, the following is criteria of the program:
Grant Amount:
Grants will not exceed $10,000 and will cover eligible expenses incurred as a result of the COVID pandemic after March 1, 2020. The grant recipient must submit a list of COVID related expenditures during the application review process.
Eligibility Criteria:
• Applicant’s business must be locally owned and operated with a physical establishment in Blaine. If there is a parent company or a second location outside of Anoka County, only the entity located in Anoka County will be eligible for a grant from Blaine.
• Applicant must be able to demonstrate financial hardship as a result of the COVID-19 outbreak.
• Applicant entity must be majority owned by a permanent resident or corporation of Minnesota.
• Applicant must be in good standing with the Minnesota Secretary of State and the Minnesota Department of Revenue as of January 1, 2020. If there is an issue pending with the Minnesota Secretary of State, the applicant may still apply for the grant, but will need to demonstrate the issue has been satisfactorily resolved in order to be eligible and receive grant funds.
• If required, the applicant must be licensed, and in good standing.
• Applicant must be current on property taxes.
• Applicant must employ 50 or fewer employees as of January 1, 2020.
• Applicant must have been in operation at least 12 months prior to application.
• Applicant must disclose all federal, state or local grant or loan applications for which applicant has applied, which has been received, or remains pending, at the time of the application.
Ineligible Businesses
• Applicants who have previously received federal, state or local grants for the same expenses.
• Multi-state chains are generally ineligible except for locally owned franchisees.
• Nonprofit organizations.
• Businesses that primarily derive income from gambling or adult entertainment.
• Home-based businesses.
• Businesses that derive income from passive investments; property rentals or property management; billboards; or lobbying.
Examples of Eligible Usage of Grant Funds
• Commercial lease or mortgage payments.
• Accounts Payable (AP) if the AP is a COVID-19 related expense incurred since March 1, 2020.
• Payroll, unless the business received Paycheck Protection Program (PPP) funds or pandemic unemployment insurance (UI) to assist with payroll expenses incurred after March 1, 2020.
• Reopening costs or safety improvement costs expended since March 1, 2020 (i.e. outdoor seating, plexiglass, cleaning products, re-staffing costs, etc.).
• Operating utilities or fees for those facilities interrupted or forced to shut down incurred after March 1, 2020.
• Payment of taxes or government utilities or fees are ineligible.
City staff will be working with the consultant to develop a web portal and applications process for businesses. An application submittal window will be made available to where applicants can submit through the portal. Grant awards will be weighted based on the following criteria:
• Were impacted by Minnesota Executive Order 20-04, 20-08 and 20-09; including (but not limited to):
a) Restaurants
b) Coffee Houses and Cafes
c) Beauty Salons, Barber Shops, Nail Salons, Spas, etc.
d) Medical or Dental facilities primarily performing elective procedures
e) Fitness Centers and Recreational Facilities
f) Retail establishments
g) Amusement/Entertainment
• Have operated in Blaine the longest.
• Can demonstrate a high number or percentage of employees are Blaine residents.
• Can demonstrate some extraordinary hardship related to COVID-19.
• Can demonstrate that the business contributed to the fight against COVID-19 by providing PPE’s, cleaning supplies, childcare to essential workers, etc.
• Is a woman- or minority-owned business.
After approval, staff will work with the consultant to finalize details of the program and initiate the application submittal process.
On June 15, 2020 the Blaine EDA adopted an emergency COVID-19 loan program using EDA funds. The proposed grant program is intended to replace any loan program.
Recommendation
Adopt the attached resolution.
Body
WHEREAS, Minnesota cities and counties are receiving federal Coronavirus Relief Fund (CRF) distributions. The fund, created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is designed to provide economic help to entities struggling because of the COVID-19 pandemic; and
WHEREAS, the City of Blaine is receiving approximately $5,000,000; and
WHEREAS, one of the eligible uses of funds is providing grants to small businesses; and
WHEREAS, the City of Blaine recognizes that many of its businesses have been negatively impacted by the COVID-19 pandemic and need financial assistance.
NOW, THEREFORE, BE IT RESOLVED, that the Blaine City Council hereby establishes a small business grant program for businesses impacted by COVID-19 and authorizes the city manager and mayor to execute any necessary documents to establish the program.
PASSED by the City Council of the City of Blaine this 3rd day of August, 2020.