The Elk Grove City Council on April 8 approved an emergency investment and relief program for small businesses financially impacted by the novel coronavirus (COVID-19).
This program aims to provide a simple platform for the city to invest emergency relief funds with participating banks.
Through those banks, local businesses in need will be provided with interest-free loans. These interest-free loans are made possible through the city’s agreement to earn a 0% interest rate during the term of their deposit.
The city will make an initial deposit of $1 million, which will be loaned to businesses within a 90-day period.
A proposal for the city to deposit an additional $1.5 million after those 90 days is dependent on the city’s evaluation of the effectiveness of the program.
Best efforts will be made by the lending banks to ensure that the city’s entire $1 million deposit is only loaned to businesses adversely affected by the coronavirus pandemic.
These lenders will also be dedicated to making smaller loans from those funds for the purpose of assisting more businesses and retaining or creating as many jobs as possible.
The city’s loan program with the banks was created through Lift Investing, which is a private company that’s managed by Region Business, a regional economic development organization.
Darrell Doan, the city’s economic development director, explained the city’s interest in having a partnership for providing these business loans.
“Essentially, we’re outsourcing our ability to make loans to small businesses to community lenders who do that for a living,” he said. “That’s their business. It’s not our business. We do not want to be in that business. That’s why this program can be so effective. We have banks standing by who know how to underwrite, originate and monitor loans.”
Doan added that the city had been seeking ways to financially assist Elk Grove businesses affected by COVID-19.
“We’ve been looking for some weeks at ways that we can help businesses gain access to short-term capital, which is the principal need to most of the local businesses right now,” he said. “We engaged in conversations with (their eventual program partner), Lift Investing, and have worked for the last week or so to fine tune the details of a new loan program.”
Council Member Stephanie Nguyen expressed her support of this program.
“The whole purpose was finding something that would work for our residents and our businesses, as well, in our city, and so, we found something that will work for our residents and so, this here is something I believe is going to be something that our small businesses can use to assist them through this,” she said.
Efforts are currently underway to make arrangements with banks to participate in this small business loan program.
Lenders of this program will report all related loan activity on a quarterly basis through Lift Investing’s reporting platform.
Lift Investing and the city of Elk Grove are jointly promoting this program.
Business owners who are interested in applying for a loan through this program can visit the website www.LiftInvesting.com.