Adopt Resolution #20-154 Approving Small Business Grant Program - Phase 2 Covid-19 Business Assistance Program

Purpose: To consider adoption of City of Ramsey Small Business Relief Grant Program policy and to authorize staff to implement the program.

Background:  The City of Ramsey has been providing assistance to its businesses throughout this COVID- 19 pandemic.  City staff has be communicating state, federal and other grant/loan opportunities to our businesses and assisting them with the application process when possible.  Federal programs such as the Paycheck Protection Plan (PPP) and Economic Injury Disaster Loan (EIDL) have been utilized by many businesses but funds have dried up in certain areas.  In an effort to get more relief for businesses and government, the federal government passed the CARES Act which allocated money directly to the State of Minnesota to assist with unexpected costs relating to COVID-19. 

A portion of this funds are being administered by the State of Minnesota and the state rolled out a $10,000 Small Business Relief Grant program with an application deadline of July 2, 2020.  The total amount allocated in this program was $60M. Criteria for that program is attached to this case as reference only.  

Anoka County also received an allocation of CARES Act Funds and are also creating a grant program similar to other city and county partners. Anoka County is still putting together its application and criteria for the program and the attached draft policy will be reviewed by the Anoka County Board on July 28, 2020.  The County will also be developing a procedure that outlines in detail how the grant selection/processing will be made.  Discussions with County Staff indicate that they will not allow a City and County Cares act grant to be awarded to the same business.  This does not seem to apply for State Cares Act grants due to the timing and notification of grantees by the state.   The goal of the City program is to get the grant money out quickly to the businesses in Ramsey that need it and have it simple to administrate,

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Staff has reviewed several peer community and county policies/criteria and reviewed options with the EDA on July 16, 2020.   The draft minutes outlining that discussion are included as an attachment to this case.  The general outcomes of the discussion focused on getting the money out quickly, increasing the eligibility of more small Ramsey businesses for the grants, and to assure that these companies can demonstrate the need for these funds.  

In order to have a successful grant/loan program the city will need to put in place something that has meaningful impact to businesses,  is easy to apply for, and has criteria that allows for quick processing of the application and administration of the grants.  To be eligible to receive Small Business Emergency Assistance funds, a business must demonstrate that its operations have been directly and adversely affected by the COVID-19 Health Pandemic.

Below are some criteria/processes recommended by the EDA:  

Business size: 30 FTE (Full Time Equivelent) Employees or less

Business type: Any Ramsey Business that can show impacts from COVID-19 (subject to eligibility criteria under CARES Act)

Time business has been in operation: Business must have been in operation from January 1, 2019 to application submittal

Businesses must be in compliance with City Ordinances, City utilities, 2019 property taxes or other city charges

Business Entity Type: For-Profit businesses.  Must be registered with Minnesota Secretary of State and in good standing.

• Note: Anoka County is proposing to roll out a separate program for non-profit businesses but it has not been developed yet.  Staff recommends referring non-profits to the Anoka county to serve their needs.

Grant/Loan Amount: $10,000 Grant

Business Location: Ramsey businesses located in Ramsey only

Application Period: 14 days

How grants awards are determined: Random selection from all eligible applications

Duration of time to expend funds: Funds to be expended by October 31, 2020 and expenses documented to City by November 15, 2020

Proof of need: Comparisons from last year to this year showing reduction in revenue, increased expenses, explanation of need for expenses.

Uses of funds: Current payroll obligations (i.e. may not include employees who have been laid off), lease or mortgage payments, utilities, accounts payable, property taxes and other critical business expenses that can’t be paid as a direct result of the current health emergency. Awarded funds may not be used for business owner’s/manager’s personal uses or expenses. Expenses must be directly associated with Ramsey Business location.

Grant application and administration: Staff is recommending that the City will screen applications for preliminary eligibility and give a short list to a outside vendor to underwrite need, hardship caused by Covid-19, eligible expenses and business entity and applicant verification.   Staff will work with outside vendor to develop a uniform grant agreement. The cost for administration to not  exceed 7.5% of the grant program amount. This expense will also be reimbursable under the CARES Act. Businesses not eligible:

• Do not have a physical address within the City of Ramsey
• Applicants who have previously received federal, state or local grants for the same expenses 
• Multi-state chains are generally ineligible except for locally owned franchisees.
• Businesses that primarily derive income from gambling or adult/use entertainment.
• Home-based businesses are generally ineligible except for in-home licensed childcare providers.
• Businesses that derive income from passive investments; property rentals or property management; billboards; or lobbying.
• Have no current or historical financial statements.
• Non-profit organizations 

If a small business grant policy program is approved, staff will work to create a simple application, process and work with a Third Party vendor to implement this program based on the criteria that is adopted.

Alternatives Include:

1. Adoption of Resolution #20-154 and attached City of Ramsey Small Business Relief Grant Program; subject to City attorney review.
2. Adoption of Resolution #20-154 with amended criteria for the City of Ramsey Small Business Relief Grant Program; subject to city attorney approval.
3. Something else

$215,000 from City of Ramsey Cares Act allocation. (includes $15,000 for administration)

The EDA met on July 16, 2020 to discuss the Small Business Grant Program.  The EDA discussed grant program criteria and it has been included in the attached policy document.   

EDA recommendation would be to Adopt Resolution #20-154 Approving Small Business Grant Program - Phase 2 Covid-19 Business Assistance Program; subject to City attorney approval (as presented).

Motion to Adopt Resolution #20-154 Approving Small Business Grant Program - Phase 2 Covid-19 Business Assistance Program; subject to City Attorney approval.