City of Westminster – Small Business Recovery Loan Program
The City of Westminster has created the Small Business Recovery Loan Program, which will provide funding to small businesses needing financial assistance in overcoming the temporary loss of revenue due to the COVID-19 pandemic. The goal of the Program is to help bridge the revenue gap created by the pandemic, to stabilize businesses and employment rates. The program is based on the availability of funds, program guidelines and submission of all required information and supporting documentation. Small businesses with 25 or less employees may be eligible to receive a loan of up to $20,000. The loan may be used for working capital to cover the day-to-day business operating expenses such as rent, utilities, payroll, or other similar expenses that occur in the ordinary course of operations. Interest rate on the small business loans will be set at 2% for five years, with no prepayment penalty, with the first payment deferred twelve months.
The application will open on Monday, June 29, 2020 at 8:00 a.m. until Monday, July 6, 2020 at 5:00 p.m.
DETAILS ABOUT THE LOAN:
- Loan amount up to $20,000;
- Loan term up to 5 years;
- Interest rate of 2%;
- 12-month initial deferment before 1st payment;
- Loan can be used for payroll, rent, accounts payable, utilities, and general operating expenses only; and
- This loan is eligible to all for-profit and non-profit businesses located in Westminster that have 25 or fewer employees
To be eligible to apply for the Small Business Recovery Loan Program, a business must meet certain criteria that has been established by the City of Westminster. There are three steps to qualifying:
- The business must be affected by COVID-19,
- The business must meet small business eligibility standards (as created by the City of Westminster), and
- The business owner must prove the ability to repay the loan through a strong history of business performance as shown in tax statements, P&L statements, credit score, etc.
Business must have been affected by COVID-19
The business applicant must prove that their business has been affected by COVID-19 in one of the following ways:
- Sales from the business are down more than 25% compared to the previous three months (Prior to February 15, 2020).
- The business has had to lay off at least one of its employees (Full or Part time).
- The business was required to close operations to the public as a result of stay-at-home orders.
- One or more of the employees in the business have contracted COVID-19, while at work.
General Terms and Conditions
The business applicant must meet the following minimum requirements to be considered for loan funding:
- The business must be physically located in Westminster;
- Minimum credit score of 650 per business owner;
- The business must have been in operation for at least two years;
- The business must have an active Westminster business license;
- The business must have 25 or fewer employees, including the owner;
- The business must submit the application and all required supporting documentation; and
- Must prove ability to repay the loan after initial deferment period (12 Months) through submittal of financial records and credit score check
ELIGIBLE ACTIVITIES AND POST APPROVAL ACTIVITIES
Eligible activities for the use of funds should be used to cover fixed expenses for the business. The primary fixed expenses will include rent or mortgage expense, payroll, utilities, inventory or other operational expenses for the business. Note that a maximum of 25% of the funds can be used for working capital as the business moves back to becoming fully operational again, with the balance to be utilized for hard costs rent/mortgage, utilities, and payroll. Applicants will fill out a Use of Funds form that will breakdown how the funds will spent within their business. Each applicant will need to sign and verify that the loan will be spent on business expenses in a manner substantially similar to the Use of Funds statement. Any use of funding other than that to support the business is strictly prohibited.
Post Approval Activities
Please note that the City is requiring all businesses that are awarded a loan must consult with the SCORE and the SBDC during the first year of the loan to maximize success rates.
LOAN QUALIFICATION AND EVALUATION CRITERIA
Applications that meet the minimum eligibility requirements shall be further evaluated to determine loan priority using the following scoring model.
- Completeness of application
- Eligibility of the applicant (see minimum requirements under “General Terms and Conditions”)
- Eligible use of loan funds
- Length of time in business
- 2019 business net revenue
- Ability to repay the loan based on 2018 and 2019 profit and loss statement and tax returns
- Total expenses of payroll, less owner/s
LOAN REVIEW AND APPROVAL PROCESS
- Application: The business applicant may apply for the Small Business Recovery Loan Program by submitting an application form and all required supporting personal and business financial documents to the Administration Department or via the application portal on the City’s website at www.westminster-ca.gov.
- Review: The application and documents will be reviewed by the CSUF SBDC to determine application/documentation completeness. If the SBDC determines that information or supporting documents were missing from application, then the application is not considered complete and will not receive further review.
- Verification and Eligibility Determination: The SBDC shall verify all application and information as necessary. If the loan request meets the criteria for program funding and has submitted all required documentation, the application package will be prepared for submission to the Loan Review Committee.
- Loan Review Committee: The SBDC will present the application package to the Loan Review Committee for review. The Loan Review Committee will be comprised of two City staff members as appointed by the City Manager, as well as three business community members the SBDC will identify. The Loan Review Committee will review loan applications on an ongoing basis until all funds are disbursed. Funding decisions will be made within 30 days of receiving a complete application. Please note that due to the limited funds available, this process is expected to be very short. Based on the SBDC’s experience during the COVID pandemic, this loan program may be over-subscribed as early as the first day of application submittal.
- Final Approval: Following the Loan Review Committee recommendation of approval, the loan application package will be submitted to the City Manager to verify eligibility review, and approve loan disbursement.
- Loan Disbursement: Upon City Manager approval, the applicant will be notified that they have been approved and will receive a loan agreement to review. The Community Development Department will execute a loan agreement with the applicant. Once the loan agreement is executed, the fully executed loan agreement will be sent to Accounts Payable for disbursement of funds.
Notice of Loan Award or Denial
Each applicant shall be notified in writing whether their application has been selected for a loan review or if their application was denied. All small businesses that have been awarded loans will have the opportunity to be published on both the City of Westminster’s website and in marketing material that will be displayed throughout various channels.
Post Loan Follow Up
The CSUF SBDC will continue to work one-on-one with each loan awarded small business, throughout the twelve months following loan disbursement. In addition to this assistance, successful applicants will be required to meet with a SCORE representative to receive additional coaching. The CSUF SBDC and the City of Westminster, to highlight the success of the program, will create a six-month and twelve-month report.
Program Complaint and Appeal Process
Complaints concerning the Small Business Recovery Loan Program should be made to the City of Westminster Administration Department (“the City”). If unresolved in this manner, the complaint or appeal shall be made in writing and filed with the City Manager.
Equal Opportunity Policy
The Administration Department shall not discriminate upon the basis of sex, age, race, creed, color, religion, national origin, marital status, ancestry or physical handicap in accepting applications and processing Program application.
One of the unique abilities that the CSUF SBDC Network has is a database collection system called Neoserra that allows each client to be tracked, monitored, and measured throughout their time using SBDC services. The system will track every seminar/workshop they attend, each consulting session that the client completes with a business advisor along with the notes of what happened in the meeting. Vital demographics including type of industry, veteran status, address, type of formation and more are inputted into the system. Neoserra is also used to track the metrics of each client including the following metrics: start of business, change in sales, capital infused into business including both debt and equity, jobs created and jobs retained. The tracking system will allow the OCIE SBDC Network to produce accurate reports and success stories for the City of Westminster to use moving forward.