SAN MARCOS — During the early stages of the COVID-19 crisis, the City of San Marcos launched its Business Sustainability Program in an effort to provide low-interest loans to small businesses in the city that were waiting for federal assistance.
Since then, the loan program has helped 120 local businesses that used the money for payroll, lease payments, day-to-day expenses and more.
The program, which was launched March 24, set aside $3 million of the city’s General Fund Reserves to loan to small business owners who needed financial help. Each qualifying business could receive up to $50,000.
After loaning out a total of just under $3 million, the city concluded the loan program on May 7.
Tess Sangster, economic development director for the City of San Marcos, told The Coast News that after receiving $1,726,482 from the federal CARES Act via the county disbursement in June, the city decided to allocate $997,140 to forgive portions of those loans and turn them into grants.
“We initially didn’t have the resources or the funds to give that money away as grants … but the larger point of the loan program was to be an assistance to the businesses before they could get the federal Paycheck Protection Program (PPP) money,” Sangster said. “A lot of businesses we worked with were so appreciative of that.”
Sean Harris, management analyst for the City of San Marcos, explained that the degree of loan forgiveness given to each business was contingent upon how it was impacted by the COVID-19 closures.
For example, small businesses like restaurants and gyms were able to have 50% of their loans forgiven. Businesses that had to make alterations, but did not face shutdowns, had 30% of their loans forgiven. Larger businesses that may have been deemed essential had 15% of their loans forgiven.
“There’s risk with every loan … but our main concern was being the bridge in that time when businesses were waiting to get the federal money that was coming,” Harris said. “That’s why we worked so quickly. On the faster end, we were able to turn it around in four to five days. Our average was nine days from when they applied to when they got the money in their bank account.”
The repayment process won’t start until 120 days after the emergency is declared over.
More information about the Business Sustainability Program can be found at the City of San Marcos website.