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Calexico Council to Consider a Pair of New COVID Loan Initiatives

Calexico Council to Consider a Pair of New COVID Loan Initiatives

CALEXICO — Calexico council members are being asked to approve the parameters of a pair of loan programs meant to disburse some $320,000 total in coronavirus-related emergency funding, one for small businesses owners and another to help residents pay their utilities.

“The City Council is moving forward in helping any way we can in getting our businesses up and going. … With our new city manager, Miguel (Figueroa), he’s searching and looking for anything the city as a whole can benefit from,” Calexico Mayor Rosie Fernandez said during a brief interview earlier in the week.

She added the utility assistance program, which is geared toward residents, is for a period of up to three months and is based on income verification, Fernandez said Sept. 14.

A meeting in which the two loan programs was set to be discussed is scheduled for Sept. 16, which occurred after this newspaper’s deadline for the week.

The small business loan program is on a “first come, first served” basis and available to both for-profit businesses and nonprofit agencies in the city, Fernandez added.

The council was being asked to approve the “formation” of the aptly named Calexico Business Stabilization Lending Program, which is being funded through the city’s share of the $2.2 trillion federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) economic stimulus package.

As part of the CARES Act, Calexico received some $504.948. The city is using $150,000 of that amount for the Business Stabilization Lending Program, according to a report for the council prepared by city contract planner Christopher Velasco.

“Small businesses face many challenges in response to COVID-19 and the negative impacts that shutdowns have had on their employees and owners. … Calexico is committed to stabilizing the small business community by providing direct loans. A COVID-19 Business Stabilization Lending Program in Calexico will help mitigate the economic impact of the pandemic on the small business community,” according to Velasco’s report.

For-profit businesses and non-profit corporations will be eligible to apply for a single loan of up to $7,500 as long as the merchant, business owner or nonprofit operator possesses a valid city business license. Funds can be used to cover short-term working capital needs, such as payroll costs, rent, routine real estate and equipment financing payments, utilities, or losses due to “destabilizing events” related to COVID.

The funds will be available until they are exhausted, according to the report, and applicants must have had a physical establishment in Calexico in operation as of Dec. 31, 2019.

Applicants must also have a demonstrated hardship due to COVID-19, such as loss in revenue, and the businesses must be in “good standing” with the city, including being current on utility bills, have no liens or judgments, according to Velasco’s report.

The loan could be 100 percent forgivable, meaning the business might not have to pay it back, as long as certain thresholds are met.

“The applicant would be eligible for a forgiveness clause should the entity prove that it has maintained or hired back the previous workforce. The forgiveness clause would be triggered by the decrease before and after employment numbers, with a 20 percent decrease in the forgiveness amount per one full-time employee lost,” according to the report to council.

An example is, according to Velasco, “if a business laid off five employees or more and after the six-month anniversary, and these full-time employees had not been hired back or replaced, the entire loan amount would need to be paid back (20 percent decrease in forgiveness per job lost). If a full-time employee has not been hired back/replaced, the entire loan amount would need to be paid back (20 percent decrease in forgiveness per job lost).”

The city determines the total number of employees of a business on a full-time employee basis, according to the report. A full-time employee is one who works 40 hours per week. For example, one employee who works 40 hours per week equals one full-time employee; if a business has four part-time employees who work a total of 10 hours per week, those employees equal one full-time equivalent employee.

Under a separate agenda item, the council was being asked to “adopt and approve” subsistence payment options and subsistence payment guidelines for assistance with utility payments, according to a separate report to the council by Velasco. Although this program is geared toward residents, it does appear that small businesses are eligible, too.

On Aug. 26, the council held a public hearing tied to the funding of the utility assistance program, which also utilizes COVID-19 emergency funding that comes from the CARES Act, but the funding mechanism is through the state Community and Housing Development Department’s state Community Development Block Grant Program. The state had made available $19,331,740 for this program.

Calexico was awarded $170,998 in state CDBG COVID funding.

“Under this program, eligible residents and businesses impacted by COVID-19 may be eligible for up to three months of utilities services and/or rent assistance. In order to maximize the use of these payments given staffing restrictions, the most advantageous selection would be for the section of utility payments for up to three months. The City Council would be approving guidelines to provide assistance under the following parameters: Utility assistance for up to three months (water, electricity and gas),” according to Velasco’s report. There appears to be a limit for electricity assistant of up to $700.

If the program is approved, it will have a more complicated structure than the business stabilization program. The utility will be based on income verification and break down along numbers of those living in a household and income category from “extremely low income” to “moderate income,” according to Velasco’s report.

“Utility bill must be dated after the national emergency declaration date of March 13, 2020, by the United States government,” the report explained.

In Other City Business

In addition to the loan programs, Mayor Fernandez is being asked to appoint individuals to the Centinela State Prison Advisory Committee, a primary representative and an alternate to the Imperial County Transportation Commission board, an administrative hearing officer, and, lastly, a primary representative and an alternate to the Imperial Valley Economic Development Corp.

This story is featured in the Sep 17, 2020 e-Edition.

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