Slightly than create its personal pot of cash to assist native companies struggling by way of the pandemic, Santa Clara County will spend money on a statewide fund that provides loans to small companies.
The Board of Supervisors on Dec. 8 voted unanimously to speculate $6 million into the California Rebuilding Fund with the intent of providing loans to native small companies.
Supervisors count on to signal on in January. The county’s portion can be along with the state’s pot of $125 million.
The Rebuilding Fund, which launched in November, loans as much as $100,000 to small companies in economically deprived areas, in addition to these companies that sometimes are unable to get financial institution loans.
Later subsequent 12 months, supervisors could have the choice to contribute an extra $19 million into the Rebuilding Fund, dedicating a complete of $25 million towards Santa Clara County companies.
The loans can be disbursed and repaid over a interval of three to 5 years, with the cash reinvested in this system till $100 million of Santa Clara County-specific loans have been issued.
Presently, companies with 50 or fewer full-time equal workers and $2.5 million or much less in gross revenues in 2019 are eligible to use for Rebuilding Fund loans.
Supervisor Joe Simitian, who together with Supervisor Susan Ellenberg in October proposed the county create its personal small-business mortgage program, retooled the concept after a 45-page staff report cautioned against it.
County Government Jeff Smith identified that giant mortgage applications, comparable to these provided by the California Small Enterprise Administration (SBA) and the California Capital Entry Program for Small Enterprise, have a median default charge of practically 14%. Moreover, assured loans usually tend to default earlier than and after financial downturns, such because the one the nation is going through now, he mentioned.
As of November, the county was facing a budget deficit of $200 million to $500 million. The county predicts one other $245 million in prices associated to coping with COVID-19 by way of June, in extra of state and federal funding acquired.
“We’re 5% of the inhabitants of the state,” mentioned Ellenberg. “I’ll advocate that our companies get 5% of that $125 million,” plus the extra $6 million put aside, she mentioned.
However even the $6 million has to return from someplace, and that will seemingly be from the county’s common fund.
Wendy Ho, coverage officer from the Silicon Valley Council of Nonprofits, cautioned towards dipping into the overall fund for bills associated to the mortgage program, citing funds cuts and the county’s massive deficit.
“It could influence the county’s capability to supply its present stage of security web companies, very seemingly triggering additional discount to county workers,” Ho mentioned.
However many others had been supportive, stating enterprise homeowners have few choices left to outlive.
“Small companies are out of choices. Interval,” mentioned Peter Katz, CEO of the Mountain View Chamber of Commerce. “By no fault of their very own they’ve been pressured to chop workers, minimize hours, change operations and set up new gear — all of which have incurred important prices.”
Most companies have been by way of a number of closures and openings up to now 10 months, Katz mentioned.
“Every of those modifications have had dramatic modifications of their already skinny margins,” Katz mentioned. “Half measures won’t work. We can not wait and we can not brief change our small companies.”
With the board’s approval, it’s as much as Smith and his workers to search out $6 million to place towards this system.
“We used all of our one-time funds to steadiness the 2021 fiscal 12 months. There’s no actual reserves left apart from the contingency reserves,” Smith mentioned. “And we’re engaged on attempting to place each cent of fund steadiness again into the funds so we will keep away from additional reductions.”
Smith mentioned he’s nervous about this new expense.
“However I believe we will discover a method to give you $6 million one-time funds,” he mentioned.