The Carrboro Emergency Fund Review Committee approved nine small business loan applications, adopted a seven-year payback period and asked the Carrboro Town Council to open a second round of applications Monday.
According to the Town’s loan fund schedule, approved businesses should receive funds by April 10 if the Town receives all required paperwork.
The money will come out of the emergency loan fund the Carrboro Town Council set up on March 24 to help local small businesses and nonprofits retain their employees.
“We think that at some point the coronavirus will pass,” said Carrboro Town Manager David Andrews. “We want to have our employees and infrastructure in place so that we can have economic recovery as soon as possible.”
According to the application, any Carrboro-based business or nonprofit that serves Carrboro may apply for up to $25,000 at no interest if they have two or more full-time employees and a credit score of at least 620. The Town will also favor businesses that have been open for at least three months.
Annette Stone, Carrboro’s economic and community development director, said the loan fund originally had $475,000 available. The Carrboro Tourism Development Authority contributed $175,000, while the remaining $300,000 came from the Town’s decades-old revolving loans fund.
Now, about half of that sum is left, said committee member David Jessee, who is also the chairperson for the Carrboro Business Alliance.
Stone said the Town initially received 48 applications but had to reject 26 from businesses that didn’t provide the additional financial documents the Town required. The committee reviewed the remaining 22, approving nine. They also approved three others on the condition that those businesses submit missing forms to the Town.
But Jessee said the committee only denied the last 10 because they didn’t submit credit reports.
“It didn’t have to do with their business,” he said. “We didn’t know who the businesses were because that was blacked out. It was because they didn’t have the credit reports included, which was a minimum criterion.”
Jessee said the committee had agreed to deny all applications that didn’t meet the minimum criteria imposed by the council.
“We’re trying to be fair and equitable about who gets the money,” he said. “And so everyone who applied has to meet those criteria, and if they didn’t have their credit report, then right out of the gate, it’s like, ‘Well, we can’t.’”
But Jessee said these businesses would have another chance to apply if the council approves another round — which the committee unanimously recommended the council do.
Successful applicants will receive 90 percent of the amount they applied for as a loan and the remaining 10 percent as a grant. The Town will require businesses to begin paying back the loan six months after the state of emergency has been lifted. Staff has not yet decided which state of emergency.
Following those six months, businesses will have seven years to pay back the loan, which the committee also decided Monday.
“The choices were three, five and seven years,” Jesse said. “And we want to give them as long as possible and reduce the pain as much as possible.”
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