Though the need is expected to far exceed the capacity, the city of Spokane announced a new loan program Thursday for small businesses that fall into the “gaps” in federal and state assistance.
The program will provide loans from $10,000 to $25,000 to Spokane businesses that are otherwise profitable but struggling to make ends meet during the COVID-19 pandemic.
“There’s a huge need,” Mayor Nadine Woodward said.
The loans will carry a 5% interest rate and a 2% fee for businesses, which in order to qualify must have an active business license in Spokane, have had a profitable year in 2019 and have a credit score of at least 640.
The $500,000 in funding available to businesses comes from the nonprofit Craft3, which specializes in providing loans to small businesses – including several on North Monroe Street during the road’s reconstruction in 2018 – and will administer the new program. Officials expect the $500,000 will not last long.
The city invested $100,000 of its federal Community Development Block Grant money to lower the interest rate to 5%.
The amount each business qualifies for will depend on its need and its projected ability to repay the loan.
The loans will be targeted at businesses with 50 or fewer employees, according to Tim Sigler, director of the city’s Community, Housing and Human Services department. There are no specific restrictions on how the funding can be spent, he said.
The minimum credit score of 640 is intended to leave the program open to businesses that may otherwise have challenges obtaining a loan.
“With larger (lending) institutions, the credit score would have to be much higher than that,” Sigler said.
The city expects the application period to be short, launching next week and potentially lasting a week or less. Applicants are asked to call the city’s new financial helpline at (509) 625-6650 for an initial screening. If it qualifies, a business will be directed to Craft3 to fill out an application.
Woodward said small businesses are having difficulty accessing resources, such as the Small Business Administration’s Paycheck Protection Program. On Thursday, that program ran out of funding, according to media reports.
“There is a gap that some of our small businesses are falling into,” Woodward said.
The Community, Housing and Human Services board approved the use of block grant funds to support the program. Pending approval from the Spokane City Council on Monday, it will begin taking applications next week.