The city of Kokomo has launched its own program to help up to 200 local businesses that are struggling due to the ongoing COVID-19 pandemic.
The Board of Public Works and Safety approved Wednesday the creation of the $1 million Kokomo StrongER (Emergency Relief) Forgivable Loan Program.
The program allows for a local business with 20 employees or fewer to receive up to $5,000 over a five month period to help pay for rent/mortgage, utilities, insurance, inventory and other business-related expenses. The most a business could receive a month is $1,000.
Any business that receives money will not have to pay the loan back, as long as the business does not close or relocate out of the city limits within one year of signing the loan agreement.
The flood of phone calls from local business owners after the county implemented restrictions and closed businesses deemed “nonessential” prompted the city to take action, Kokomo Mayor Tyler Moore said in an interview Wednesday.
“We’ve heard that a lot of them are struggling,” Moore said. “We want to give them some help, and this will be a small splash of cash to do that.”
Both the state of Indiana and the federal government have implemented similar programs.
Under the CARES Act Congress passed, the Paycheck Protection Program allows businesses with 500 or fewer employees to receive a loan up to 2.5 times the business’ average monthly payroll plus benefits up to $10 million. If the business maintains the same number of employees at the same pay level for the eight weeks following the loan origination date, the loan will be forgiven.
Last month, Gov. Eric Holcomb announced Indiana small businesses and nonprofits are eligible to receive a loan of up to $2 million with 3.75% and 2.75% interest rates, respectively, with up to 30-year terms from the U.S. Small Business Administration.
Both the state and national programs, though, have been plagued by wait times, website crashes and general uncertainty.
The city’s program, Moore said, is designed to be quick and less bureaucratic, with the city aiming for applicants receiving a response and a potential loan agreement within a week of submitting. Applications will be handled by the city’s Development Department.
The application is just two pages and asks basic questions, such as the name of the business and contact information for the owner. Applications will be reviewed on a first come, first served basis. The deadline to file is July 1. In addition to the application, businesses owners have to submit a W-9 and profit and loss statements for 2019 and 2020 to date.
Demand for the relief program is already high.
Within an hour of the city announcing the program, it had already received 10 applications.
“My phone is already very busy,” Tom Tolen, development specialist for the city, said Wednesday.
Moore said he expects the majority of businesses that apply and meet the requirements will receive assistance given there’s money still available, though he kept open the possibility that some could be denied.
“It’s hard telling until we start getting applications,” Moore said about the possibility of some eligible businesses being denied.
The money for the Kokomo StrongER (Emergency Relief) Forgivable Loan Program is coming out of the city’s economic development income tax (EDIT) fund. Money for that fund comes from the local income tax.