San Marcos loans $3 million in emergency funds to local businesses - The San Diego Union-Tribune

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San Marcos loans $3 million in emergency funds to local businesses - The San Diego Union-Tribune Posted: 27 May 2020 12:52 PM PDT More than 100 small businesses in San Marcos received short-term loans from the city through a program designed to provide relief in the early phase of COVID-19 closures. The program, launched on March 24, allocated up to $3 million from the city's reserves, for zero- or low-interest loans to small businesses who needed immediate cash flow to cover expenses such as payroll, rent, utilities or other operating costs. As of Tuesday, the city had loaned a total of $2,919,800 to 119 local businesses within its jurisdiction, said Economic Development Director Tess Sangster. "A lot of businesses were having trouble accessing federal funding under CARES Act," Sangster said. "This was seen as gap funding so they could pay their bills in April and May." Some of the businesses subsequently received federal assistance, as those loan programs became more streamlined and easier to access, she said, but the city's offer was intended to hold them over in the meantime. Advertisement "It was for that really bad time, with no money, not knowing what was going on, that period of uncertainty," she said. Several business owners who received loans said the application process was efficient and they received the money quickly at a time when they urgently needed the funds. "I was really impressed with the city," said Nancee Whitson, owner of Fresh Healthy Cafe. "It's a relatively small city and they were able to pull everything together and keep (businesses) as viable as they could." Whitson said business plunged at her cafe, located near Cal State San Marcos, after the university campus and local businesses shut down. However, she still offered takeout orders, and needed to pay her staff and purchase fresh food daily. Advertisement "By the city stepping up and providing funds in time, I was able to retain a lot of our employees through the darker hours of the situation," Whitson said. The city loan program targeted small businesses, and most that applied were in food or service industries, such as restaurants, cafes and breweries, or fitness facilities, beauty shops, barbers, dentists, chiropractors, veterinarians and photographers, Sangster said. Other recipients included specialty businesses such as a surfboard manufacturer, an aquarium supply store and furniture dealers. The city received a total of 145 applications, but declined some because they were in essential sectors, such as construction, that have still been able to operate during the closures, Sangster said. Large retail chains also weren't part of the mix, she said, as most have other sources of capital that small businesses can't access. Of the 119 approved, 107 had 20 or fewer employees, and only three had more than 50. On average, businesses approved for the San Marcos loans have nine employees, said Sean Harris, a management analyst for the city. Advertisement The city made lump sum payments ranging from $2,000 to the maximum allowed amount of $50,000. It offered the loans for terms ranging from six months at zero percent, up to four years at interest rates no higher than 3.5 percent. Steve Munson, co-owner with his wife of Dos Desperados Brewery, said their production and sales dropped to 20 percent of usual after the closures, and they had to furlough two-thirds of their staff. The city loan helped hold their operation over until the couple could receive aid from the federal Small Business Administration, he said. "It really worked out well for us," he said. "It was quick and easy, and they were very, very helpful. We took whatever they offered, whatever the maximum was. It was really a great deal." Guan Sun, owner of Macchiato, a coffee, tea and desert shop, said he received funding within a week of submitting a loan application, which enabled him to make his payroll during the first few weeks of business closures and his subsequent reopening under social distancing guidelines. Advertisement "It helped me tremendously to get the door open, and pay all my employees," Sun said. Sangster said San Marcos will face its own budget shortages in the coming year, but city officials recognized the importance of providing a safety net to sustain local businesses through the shutdown. "It shows our commitment to our business community, and that we value them," she said. "That was the message to our business community: that we're right there with them, and they're hugely important to our community."

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