Local small business owners are going to have a second opportunity to pick up some City of Rome COVID-19 emergency grants of up to $5,000.
The city only got 34 applications from the first funding cycle and Community Development Director Bekki Fox said she feels it is likely a number of those applicants will not be funded for one reason or another.
The city received $258,026 in CARES Act Block Grant funds from the U.S. Department of Housing and Urban Development and put together a small business assistance program that would offer up to $5,000 in assistance. Essentially, that means upward of 51 qualifying businesses could receive assistance.
“We were worried in the beginning. We only had 12 applicants after the first week,” Fox said. “Some of the 34 likely won’t make the cut because of the low-moderate income requirements, or job creation numbers. We know that we’ll have money for a Round Two.”
Once the loan review committee finalizes its examination of the first round of applications, Fox said the city will probably wait until late July to put out another call for applicants.
“We don’t want them to overlap because it’s a whole lot of work,” Fox said.
“We had some feedback from a couple of businesses that felt like our grant applications are a little intrusive,” Fox said. “That we were asking for a lot of personal financial information for a small amount of money.”
The criteria is dictated by HUD.
“All the regulations for CDBG are attached to this money so we have to meet a national objective ... and the only way the funds are even available to small businesses is for the low to moderate income benefit,” Fox said.
But the lack of applications is keeping those dollars from getting to small businesses.
“This was exactly what we didn’t want to happen, or intend to happen,” said City Commissioner Mark Cochran, who chairs the Community Development Services Committee.
Eligible applicants must have brick and mortar businesses within the city. Home-based businesses, nationally franchised businesses and nonprofit organizations do not qualify. The business must be able to substantiate a measurable loss of revenue due to COVID-19 and cannot have gross annual receipts in excess of $2 million on a profit/loss statement.
To be eligible for assistance, small businesses must fit into one of two categories.
The first category is for low to moderate income micro-enterprises, which are for-profit businesses with five or fewer employees — including the owner, who must also be a low to moderate income individual.
The second category is for micro-enterprises that are not owned by a low to moderate income individual, or a small business with between six and 50 full-time employees.
The city uses a HUD-developed scale to determine whether or not a person fits into the low to moderate income category.
The business owner must indicate how many people are living in his or her household. If the number is two, gross household income cannot exceed $37,600. If there are four in the household, the maximum income is $46,940. If there are six in the household, the low to moderate income threshold is $54,500.
Fox cited one example from the 34 applications that were turned in. The business had one employee who was a college student. Taking into consideration the household income of the college student’s parents, Fox said the employee could not be considered in the low to moderate income category.
A sole-proprietor business is eligible if the owner’s household income is at or below 80% of the area median income and they have five or fewer employees, including themselves.
“That has been a huge challenge for us,” Fox said. “The information that we’re collecting through this application process is all information that HUD is going to look at when they come and audit this program.”
Of the 34 applications that were initially turned in, Fox said it appears as if at least 13 have a good chance at funding. Once the grant review team examines the applications, checks could go out as early as July 10.
The grant funds can be used for routine business expenses ranging from paying a lease or mortgage to utilities. The business will be required to submit receipts from the landlord or mortgage holder as well as the utility vendor.
Funds cannot be used to reimburse expenses incurred before the grant agreement is signed.
Business must be able to provide proof that they suffered a loss of income due to the COVID-19 pandemic. That’s been a challenge to a lot of small businesses whose record keeping may not be as detailed as larger corporations, Fox said.
If the money is used for job creation, documentation is required to prove that at least 51% of the money will go to low and moderate income employees.
Rehiring someone who was laid off as a result of the coronavirus pandemic is considered to be job creation. If the money is used for job retention, the business owner must be able to substantiate that the job would likely be lost without the grant assistance.
Additionally as it relates to job retention, the jobs that are being saved should meet one of two criteria. First, the person who might have been laid off is a low to moderate income worker. Second, if that position can be expected to come open within a two-year window, efforts will be made to fill it with a low to moderate income worker.
Cochran said the committee is trying to find ways to help the business operators walk through the process and make it easier to understand.
“We as a City Commission tried to pare down the document to its bare essential. Because it’s the federal government, it still requires a lot of paperwork,” Cochran said.
City Commissioner Randy Quick, a member of the committee, has suggested that the Community Development Department work with the Rome Floyd Chamber to produce an instructional video prior to the second round of funding. The hope is that it would easily explain the requirements of the program and be distributed via social media.
Fox also said that, given the current state of the pandemic, she would not rule out chances for another round of grant funding flowing from Washington in the future.