The SBA’s portal (on-line application process) opened for Round 2 CARES Act funding on Sept. 1 at 8 a.m. and closes as of Sept. 8 at 5 p.m. During the eight days, the SBAC (Small Business Assistance Corp.) expects to process 500 or so applications through funding provided by the City of Savannah. Round 2 followed the same requirements as Round 1 (i.e. business license, tax return, Profit/Loss Statement) except that the maximum grant amount was set at $20,000 to provide funding for more opportunity for businesses to participate (80 to 100). As in Round 1, businesses use expenses from their tax return as the basis for the grant amount (based on average monthly expenses x 2.5).

In addition, to be more deliberate in the determination of businesses that will receive funding, grant funds will be targeted for distinct target populations:

• Minority businesses (at least 51% owned and controlled by an ethnic minority)
• Businesses within Neighborhood Revitalization Areas (CDBG Census Tracts)
• Businesses with 5 or fewer employees
• All other businesses (general)

Rather than first come--first serve as in Round 1, points will be awarded for each application. One point will be awarded for a minority-owned business, one point for businesses within Neighborhood Revitalization Areas and one point for business with 5 or fewer employees. Businesses that accumulate three points will be given priority. In other words, a minority-owned business in a revitalization area with five or fewer employees will be ranked at the top of the list for funding. Once all of those businesses are funded (assuming enough funds), the next priority will be businesses with two points and so on.

QUESTIONS ABOUT ROUND 1

Questions surround Round 1 and the determination of which businesses received the $2 million that the City of Savannah provided to SBAC for distribution.

Why recommend SBAC to manage the distribution of CARES Act Funds?

The guidance from the State of Georgia for use of Round 1 of CARES Act funds set a hard deadline of September 1. SBAC uses an on-line portal to process loans/grants and became the best, perhaps only, option to meet the deadline. The U.S. Department of Treasury certifies SBAC a Community Development Financial Institution, which is a financial institution that targets poorer local communities. 60% of SBAC’s loans must be provided to minority-owned, women-owned and veteran-owned businesses. SBAC files a federal tax return as a non-profit organization (Form 990) and remains subject to audit, including from the City of Savannah because of its work on loan programs with the City’s Department of Community and Neighborhood Services.

Who determined which businesses should receive the funding?

SBAC offered a Recovery Loan Program in Spring 2020 to provide financial assistance to local businesses that suffered financial hardship from COVID-19 and to speed up economic recovery (see attached announcement). Any businesses within SBAC’s service region could apply for the loans with a 36-month term at 6% interest. SBAC approved almost $4 million in emergency loans, including loans to 32 Savannah businesses with a total principal amount of $1.6 million. Businesses applied based on specific purposes as part of the recovery loan (i.e. employment/unemployment, utilities, rent, equipment and other recovery assistance).

Because of the Sept. 1 deadline, SBAC suggested the City direct use of funds to forgive the 32 loans, which would also recapitalize SBAC’s revolving loan fund to help other local businesses. Subsequent to SBAC’s recommendation, the City opted to use public safety salaries as a qualified CARES Act expense, which provided additional time beyond Sept. 1. The City Manager offered a different approach to allow 10 days for new applications and then backfill any remaining funds with the loans. The suggestion was forwarded to SBAC; SBAC says the new guidance was not clearly communicated.

SBAC converted the loans into grants for the 32 businesses, and then opened the portal for new grant applications. 10 businesses filed, and SBAC closed the portal to any more applications once the balance of funds was committed. Staff had no knowledge of the businesses on the loan list.

Why were the businesses predominantly from the 31410 ZIP Code and downtown area?

67% of the businesses are located in ZIP 31401, 23 of the 42 (55%) are downtown businesses (north of Park Avenue). The Governor’s shelter-in-place orders for five weeks (April 2 – May 13/partial) hurt many businesses, but especially restaurants, services and retailers. These businesses applied for loans to offset losses from closures and to speed up recovery once the shelter-in-place order ended.

The 42 businesses include:

16 Restaurants

3 Other Food & Beverage

15 Services

4 Retailers

2 Inns

2 Other

In terms of employment, the businesses employed 662. Business employment included:

50 or more employees =3

25-49 employees =3

15-24 employees =8

6-14 employees =8

5 or less employees =20

Why didn’t the list of businesses reflect more diversity?

Of the 42 businesses, minority- owned included 11, woman-owned included 14 and veteran-owned included six (some categories overlap, i.e. a minority woman-owned business).  Of the 32 loans converted into grants, 56% (18/32) were unduplicated in the count (i.e. minority, woman or veteran).

Did Round 2 follow the same requirements as Round 1?

Yes, with a few exceptions. In Round 1 and Round 2, businesses needed to provide: 1) Savannah business license (proof of "Savannah Only"); 2) Copy of latest federal tax return (proof of expenses); 3) Profit and Loss statement (for determining expenses related to COVID-19 and hardship).

In addition, Round 2 required the following:

• In existence and operational as of January 1, 2020.
• Have 10 or fewer employees (to emphasize smaller businesses).
• Have not received a City of Savannah CARES grant in Round One.

How did businesses know to apply for Round 2 funds?

Besides a news release, the City posted notices on its website and contacted the Black Chamber of Commerce. In addition, the City directed calls from 3-1-1.

What is the budget for Round 2 and how many additional businesses will benefit?

Council can set the budget for Round 2. While staff has noted $1.6M as the amount in SBAC’s revolving fund, Council can increase or decrease based on the percentage dedicated from Round 2 CARES Act funding from the State of Georgia.
 

TIMELINE