Loading...
HomeMy WebLinkAbout4.2 Award Small Business Emergency Assistance Program Grants TO: Economic Development Authority FROM: Christine Costello, Economic Development Director DATE: June 23, 2020 RE: Award Small Business Emergency Assistance Grants Background On May 6th, the City Council held a workshop to discuss a proposed Small Business Emergency Assistance Program. The City Council discussed providing financing to assist local businesses would help our local business community in sustaining their operations, preserve employment, and prevent business closures. The intent of the grant program is to promote the long-term economic vitality in the community. The City Council recommended moving forward with establishing a program. On May 7th the Economic Development Authority (EDA) reviewed the proposed grant program and recommended approval with a vote of 7 to 0. The grant program provides $300,000 from the EDA Trust fund, to provide grants of up to $10,000 per business. Businesses needed to provide evidence of income loss due to COVID-19 and proof of profitability before the pandemic. Grants would help ensure the preservation of employment opportunities through the prevention of business closure. While this effort focuses on business stability, it also assists those workers employed by a small business and allows them to continue to make rent and mortgage payments to stay in their home. On June 3rd the City Council considered revisions to the eligibility requirements to allow for a more robust application pool. The revisions included:  Business who have been in operation for one year, instead of two years,  Increase the number of full-time employees from 25 to 70, and  Allow application for businesses with annual gross income of $3.5 million or less Changes to the grant eligibility guidelines allowed more local businesses impacted by the COVID- 19 pandemic to apply. The City Council approved the revised eligibility guidelines on June 3rd with a vote of 4 to 0. To date the EDA and City Council have approved $10,000 grants to the following businesses: All About Nails New Century Salon Belissimo Salon and Day Spa Turbo Nails Las Margaritas Carbone’s Kitchen and Pub Mathnasium of Cottage Grove Cottage Grove Florist Dance by Kris Cedarhurst Historic John P. Furber Farm Hound Around Resort Healing Place of Cottage Grove Salon 80 Hair Studio Economic Development Authority Award Small Business Emergency Grants June 23, 2020 Page 2 of 2 Discussion The deadline for the final round of applications was June 17th and five (5) additional applications were received:  Oasis Chiropractic PA  Bonngard’s Family Meats  Integrity Dental Care PA  VFW Post No. 8752  Pretty Nails As in the previous two rounds applications were reviewed by Ehlers and Associates (Ehlers), the third-party consultant for the program. Ehlers reviewed the applications to ensure the applicants met the program guidelines and were in good standing before the pandemic. Based on the eligibility requirements Ehlers recommended grants to the following businesses: Please see the attached memo from Ehlers on their recommendation of grants. To date, 14 grants totaling $140,000 have been issued. If approved in this round another $30,300 in grant funds would bring the total number of businesses assisted to 18 at a cost of $170,300. All the businesses are required to provide a brief report in approximately two months (November 1, 2020 at the latest) to the EDA on how the grant funds were used. Eligible expenses include working capital such as wages, employee health benefits, leave payments, mortgage/rent payments, utilities, property taxes and other critical business expenses. Recommendation Consideration of:  Approval of two (2) Small Business Emergency Assistance Grants each for $10,000 to Oasis Chiropractic PA and Integrity Dental Care PA, approval of $1,800 Small Business Emergency Assistance Grant to Bonngard’s Family Meats and approval of $8,500 Small Business Emergency Assistance Grant to Pretty Nails. Attachments Ehlers Memo dated June 23, 2020 Revised Grant Guidelines Memo To: Christine Costello, Economic Development Director From: Keith Dahl and Stacie Kvilvang, Ehlers Date: June 23, 2020 Subject: Cottage Grove Small Business Emergency Grant Program Analysis Per your request, Ehlers conducted a review of five (5) grant applications received in the third- round of the Small Business Emergency Grant Program. We reviewed eligibility, demonstration of economic impact, and verification of the following: The applicant is in good standing with the Secretary of State The property is current on its property taxes and/or rent prior to March 16, 2020 The business is a conforming use under current zoning code with no violations No searches returned anything concerning related to the applicant Please find a summary attached for further elaboration of our review. We have redacted the financial information from the summary to protect sensitive data submitted by each applicant. Recommendation: Since the grant program was not oversubscribed again in the third-round, a lottery system was not used to determine grantees. Rather, applicants were selected based on meeting the review criteria listed above and detailed in the grant program. Based on our review and verification of the five (5) applications submitted, we recommend awarding one-time emergency grants to the following four (4) applicants. For those applicants who have been recommended to receive a reduced grant amount and/or no grant, we have provided an explanation below the table for further elaboration. Business Name Grant Amount 1 $ 1,800 2 Integrity Dental Care $ 10,000 3 Oasis Chiropractic $ 10,000 4 Pretty Nails $ 8,500 5 VFW Post 8752 $ 0 While not specifically referenced in Executive Order 20-04 or 20- 08, the Applicant had to temporarily close a portion of their operations for deli lunch service. Based on the information received from the Applicant, approximately 82% of their business comes from meat processing, packaging and sales which was deemed an essential service, and 18% of their business comes from deli lunch sales. This portion of their operations were temporarily closed. of the maximum grant. Pretty Nails tion was submitted on June 17th, a week after the gradual reopening of businesses pursuant to phase II an Prior to reopening, nail salons were specifically reference in Executive Order 20-08 and were required to temporarily close. assistance through the State or Federal Government, VFW Post 8752 Based on the information received from the Applicant, approximately 88% of their business comes from gambling activities while 12% comes from the restaurant and bar. Given the revised grant program guidelines, as of June 2, 2020, the VFW is not an eligible applicant since assistance cannot be provided to a non-profit or a business that primarily generates income from gambling activities. Should you have any questions, please contact Keith Dahl at 651-694-8595. REVISED COTTAGE GROVE SMALL BUSINESS EMERGENCY GRANT PROGRAM PURPOSE The City of Cottage Grove Economic Development Authority (EDA) has established a fund to provide forgivable, no-interest loans of up to $10,000to assist eligible small businesses impacted by COVID-19 pandemic. The purpose of these funds is to ensure the preservation of employment opportunities in the City of Cottage Grovethrough the prevention of business closures to promote long-term economic vitality in the community. Grant funds will be available on a lottery system and the application period will be open for one week. The program is subject to funding availability from the EDA. The EDA retains the authority and discretion to approve or deny an application, and reserves the right to subsequently add further priorities, change eligibility criteria, or discontinue the program in response to changing circumstances. ELIGIBILITY To be eligible to receive Small Business Emergency Assistance funds, a business must demonstrate that its operations have been directly and adversely affected by the COVID-19 Health Pandemic and/or that it operates in a category named in Executive Orders 20-04 and 20- 08. All applicants must meet the following criteria: 1. Eligible business types include locally owned and operated businesses noted in Executive Orders 20-04 and 20-08, such as those listed below. Restaurants, cafes, coffeehouses, and other places of public accommodation offering food or beverage for on-premises consumption. Taverns, brew pubs, microbreweries, distilleries, wineries, tasting rooms, and other places of public accommodation offering alcoholic beverages for on premises consumption. Gymnasiums, fitness centers, indoor sports facilities, indoor exercise facilities, exercise studios, businesses offering massage therapy or similar body work, spas, salons, nail salons, cosmetology salons, and barber shops. This includes, but is not limited to, all salons and shops licensed by the Minnesota Board of Cosmetologist Examiners and the Minnesota Board of Barber Examiners. Art and music studios. Cottage Grove Small Business Emergency Grant Program (During COVID-19) Bowling alleys, skating rinks, and other similar recreational or entertainment facilities Other businesses deemed non-essential under Executive Orders. Other businesses as approved by the EDA. 2. The business shall have a physical address (proof of address required) within the city (and not located in a residential neighborhood) and have been operating within the city long enough to demonstrate financial viability. 3. The business shall employ between 3 and 70 Full Time Equivalent (FTE) employees prior to the issuance of the State of Minnesota Emergency Executive Order 20-04 (March 16, 2020) and make $3.5 million or less in annual gross revenue. Businesses with less than 3 employees will be considered on a case-by-case basis. 4. The business must have been in operation for a least one year prior to March 1, 2020. 5. All businesses must serve the general public and be a conforming use under the current zoning regulations of the city, must not be in violation of the city’s zoning code, and must not have any delinquent taxes, bills, or charges due to the city; 6. Applicants are strongly encouraged to claim all applicable private and public insurance and utilize all other sources of applicable assistance available from other private and public sources, including but not limited to requests for rent/mortgage, utility and/or loan deferrals/forgiveness. Applicants must supply evidence that they have applied for Federal and State disaster financial assistance through the Small Business Administration (SBA) and Small Business Emergency Loan through the Minnesota Department of Employment and Economic Development (DEED) prior to applying for this grant. 7. Assistance cannot be provided to businesses or non-profits that: Do not have a physical address within the City of Cottage Grove Agricultural Related (crop or livestock production, etc.) Purchase of machinery or vehicles. Moving expenses. Land acquisition for speculation. Non-profit organizations. Self-employed, independent contractors, or businesses with no employees other than an owner(s). Corporate chains, multi-state chains. Businesses in default conditions prior to February 29, 2020. Derive income from passive investments without operational ties to operating businesses or whose primary source of revenue is from business-to-business transactions; real estate transactions; property rentals or property management; billboards; or lobbying. Primarily generate income from gambling activities. Generate any part of its income from adult-oriented or tobacco/vaping-related activities. Have no current or historical financial statements. Cottage Grove Small Business Emergency Grant Program (During COVID-19) Previously received emergency funds from the city. PROGRAM GUIDELINES 1. Amount: Business may apply for a one-time emergency grant award not to exceed $10,000. Staff will review each applicant’s request for loan funds to determine the level of assistance that will be provided. 2.Uses:Funds can be used exclusively for working capital purposes defined a paying fixed debts, current payroll, accounts payable, taxes and paying direct business-relatedbills such as rent, mortgage, or utility fees and other critical business expenses that can’t be paid as a direct result of the current health emergency. Awarded funds may not be used for businessowner’s/manager’s personal uses or expenses. 3. Term: All grant funds must be utilized within two months of the loan agreement being fully executed. 4. Proof of Need: All applicants must demonstrate financial need for grant funds prior to approval. This includes but is not limited to the previous year’s annual gross revenue, average monthly gross revenue prior to COVID-19, and projected monthly gross revenue for the next three months. Additionally, applicants are required to provide evidence of application submittal, acceptance, approval and/or denial of State and Federal emergency financing programs. This could simply include an email response from these agencies. 5. Proof of Expenses: Applicant shall provide proof of eligible expense requested to be paid with grant funds. This includes, but is not limited to current payroll, unpaid invoices, mortgage principal and interest, rent, utility payments, property taxes and/or other unpaid business-related expenses. 6. Disbursement of Funds: Funds shall be distributed within two weeks after a loan agreement has been executed by all required parties. 7. Termination: The EDA retains the right to terminate any agreement under the Emergency Assistance Program if a grant recipient is found to be in violation of any conditions set forth in the grant guidelines or grant agreement. 8.Right to Deny:The EDA retains the right to deny any application for grant funding. 9.Grant Agreement:Uponan applicant being awarded funds, the grant recipient shall enter into a grant agreement with the Cottage Grove EDA. Funds will not be distributed for ay award until the applicant provides proof of expenses and a grant agreement with the Cottage Grove EDA has been executed by all required parties. 10.Reporting:As a condition for receiving grant funding, all grant recipients are required to submit a brief report to the EDA within two months after receiving grant funds, specifying how the entirety of the grantfunds were utilized and providing evidence in the form of paid invoices, statements, or similar documentation. Cottage Grove Small Business Emergency Grant Program (During COVID-19) 11. Funding Availability: The Small Business Emergency Assistance program has limited amount of funds available. Funds are awarded via a lottery system after the one week application period is closed or until the earlier of the date the fund is exhausted, or the city-declared state of emergency declaration is lifted. 12.Indemnification:All grant recipients shall be required to indemnify the City of Cottage Grove, the Cottage Grove EDA, and any officers acting on their behalf. APPLICATION PROCESS Prior to applying, please review theProgram Guidelines to determine if your business is eligible. 1. Applications are available on the city’s website: www.cottagegrovemn.gov/sbgp 2. Application requirements will include: Basic details about the business. Basic Employment and annual gross revenue information. Information on current operations including whether the business is currently closed or is providing reduced services. Narrative descriptions and estimated calculations of the negative impacts of the business due to COVID-19. A narrative description of the current plans for resuming operations following the COVID-19 crisis. Evidence of application submittal, acceptance, approval and/or denial of State and Federal emergency financing programs. This could simply include email response from these agencies. Supporting documentation and application attachments. 3.Fully completed and e-signed applications along with required documents may be submitted online to: (Email Address). Hard copies will not be accepted. 4.Upon submission of application, applicants will receive am email confirmation receipt of application. 5. The application will be reviewed for eligibility upon receipt. If additional information or documentation is necessary EDA staff will contact the applicant. Due to an expected high volume of applications, you may consider your applications complete if staff does not request additional information within 5 business days after application acceptance. 6. Funds will be distributed on a lottery system. If you have any questions or need assistance completing the grant application, please contact: Christine Costello, Economic Development Director City of Cottage Grove Ph: 651-458-2824 Email: ccostello@cottagegrovemn.gov Cottage Grove Small Business Emergency Grant Program (During COVID-19) FUNDING PROCESS If application is approved and funds are available, businesses will be notified within 5-10 business days and provided with an electronic grant agreement for signature. Funds shall be distributed within one to two weeks after a grant agreement has been executed by all required parties depending on how grant recipients elect to receive funds. Small businesses receiving funds must commit to using the funds for eligible program expense and must agree to document and report specific uses of the funds. Accordingly, all grant recipients are required to submit a brief report to the Cottage GroveEDA within two months after receipt of funds, specifying how the entirety of the funds were utilized and providing evidence in the form of paid invoices, statements, or similar documentation (see sample report form attached). FOLLOW-UP AND ADDITIONAL RESOURCES For businesses needing additional resources such as technical assistance, larger working capital loans, or other, staff will provide ongoing assistance to businesses of all sizes and types, working with partners and other levels of government to access resources available, such as SBA and State of Minnesota DEED loans. Staff will conduct check-in with grant recipients within one year of the distribution of funds to learn the effect of the grant and business outcomes such as economic impact of the grant program, (including, but not limited to, employees retained or rehired, and sales) and whether they match the program’s desired outcomes of business and/or job retention Cottage Grove Small Business Emergency Grant Program (During COVID-19) SAMPLE Cottage Grove EDA Small business Emergency Assistance Report Form As a condition for receiving grand funding, a recipients of Cottage Grove Small Business Assistance are required to submit a brief report to the City of Cottage Grove Economic Development Authority (EDA) within two months after receiving grant funds, specifying how the entirety of the grant funds were utilized and provide evidence in the form of paid invoices, statements, bill, or similar documentation. Business Name:______________________________________________________________ Business Street Address: _______________________________________________________ City:______________________ State:____________________ Zip Code:_______________ Name and Tile of Person Completing Form:________________________________________ 1.What was the total amount of grant your business received? $_____________________ 2.Please specify how grant funds were utilized. Include expenses and amounts up to total amount of grant. For example: Payroll-2 employees, 2 weeks: $3,000, May Rent - $2,000. Please attach or provide copy of statement, invoice, bill, or similar documentation paid with assistance funds. 3.Please describe benefits received from the awarded funds. 4.Briefly explain any ongoing business impacts form the COVID-19 pandemic: Cottage Grove Small Business Emergency Grant Program (During COVID-19) Application Checklist The following documents must be included in order for anapplication to be considered complete, otherwise your application is considered incomplete and will not be considered. Completion of online application Proof of Address Articles of Incorporation Evidence of revenue lost related to COVID-19 Applicant should submit documentation that best demonstrates the impact and is deemed acceptable by Program Administrator. Some examples of acceptable documentation include rd Sales Tax Reporting, Period Statements from 3Party Sales Platforms, Merchant Service Statements, and Point of Sale or Register reports. Two most recent years of tax returns and balance sheets 2018 and 2019 Federal Business Return or appropriate business tax schedule base on entity type. Businesses that have not yet completed a 2019 Federal Return are eligible to apply and substitute other documentation of revenue and will need to provide their 2019 Federal return when completed to qualify for loan forgiveness. , Evidence of Employment Prior to March 1,2020. Acceptable documentation mayinclude period reporting from a 3rd-party payroll processor, applicant’s Federal Form 941/Employer’s Quarterly Federal Tax Return, or other State or Federal payroll-related filing. Credit Check Certification Form – Business Owner st Payroll Report from 1 Quarter of 2020 Three-month itemized expense report (May, June, and July 2020) Personal Financial Statement (Optional) SBA Form 1368 (Optional)