A small business loan program that could provide as much as $100 million in loans is launching soon in Santa Clara County.
The county Board of Supervisors voted unanimously on Tuesday to invest $6 million into the state’s “California Rebuilding Fund” to provide 3- to 5-year loans that range from $5,000 to $100,000 for qualifying small businesses with 50 or fewer full-time employees.
Businesses could apply for the loans by the new year, according to Supervisor Joe Simitian’s office, but it may be ready even sooner.
“These small businesses are the backbones of our communities, providing employment and economic stability for hundreds of thousands of residents across the county,” Simitian said. “They are hurting desperately right now.”
He is not wrong. In San Jose alone, 20.2 out of every 1,000 businesses have closed their doors since March, nearly half of them closing permanently, according to a September Yelp Economic Report.
Those figures place San Jose in fifth among metro regions across the nation for rate of business closures since the pandemic started.
And across the county, small businesses, whether they remain closed or in reduced operations, face the prospect of continued losses, layoffs and bankruptcy as they wait out the pandemic.
“Nine months into the pandemic we cannot deny the impact on working men and women who rely on their paychecks to pay the rent, buy the groceries, and put gas in the car. These are people of modest means. They need and deserve our help,” Simitian said at the board meeting on Tuesday. “When our county’s small businesses close their doors, those paychecks are gone. Their livelihoods are gone. Unless we step up.”
This is why Simitian, along with Supervisor Susan Ellenberg, proposed this program earlier at the Oct. 20 Board of Supervisors meeting.
The money would be provided by the California Rebuilding Fund and the local Community Development Financial Institutions (CDFI) would issue the loans to small businesses.
“Using the state’s California Rebuilding Fund’s infrastructure and working with local CDFIs that understand our community’s needs, prevents duplicative efforts and streamlines the process to get help to local businesses and their employees as quickly as possible,” Simitian said.
“These small businesses are the backbones of our communities, providing employment and economic stability for hundreds of thousands of residents across the county. They are hurting desperately right now.”
Supervisor Joe Simitian
It also benefits the county, Simitian said, which is also struggling with a strained budget and faces staff layoffs because of COVID-19 expenditures and lost revenue.
“Partnering with the California Rebuilding Fund is the smart way to proceed. It reduces the risk for the county, ensures that qualified financial institutions are underwriting the loans and collecting payments, and returns our investment to the county,” Simitian said.
“By recycling and relending funds as they are repaid to the county, we hope to leverage the funding we invest to lend greater amounts over time while minimizing the need for county dollars,” he continued.
County administration will be reporting back to the board in February to potentially expand the program by $19 million and other potential support efforts, according to Simitian’s office.
“(By taking) action today, we can: retain jobs, sustain businesses, and secure our tax base,” Simitian said at the board meeting. “And if we do all that, we can avoid adding to the number of folks who are obliged to rely on our county programs and services, which of course alleviates the potential for an even greater burden on our county budget.”