Small businesses in Columbus, which received low-interest loans as part of a city-funded program designed to help companies stay afloat during the pandemic, began repaying the loans.
The program, dubbed Columbus INvigorate, last year loaned about $ 874,000 to 48 small businesses within the city of Columbus. The three-year loans ranged from $ 5,000 to $ 25,000 with a six-month delay in interest payments. The interest rate after a six-month grace period is 1%.
As of Friday, the recipients of the loan had collectively paid $ 176,810, said Eric Frey, executive director of the Administrative Resources Association, the nonprofit government association that runs the program. This represents about 20% of what was borrowed.
In addition, four companies – Lockett’s, Yo Mama Frozen Yogurt and More, Dell Brothers and Columbus Rock Gym – have fully paid back their loans totaling $ 90,000. Subsequently, Locketts and Yo Mama closed.
The Administrative Resources Association transfers loan payments to the city on a quarterly basis and has so far returned about $ 116,000 to the city’s coffers, Frey said. None of the 48 recipients defaulted on their loans.
“We hoped that this program would help these companies get through (the crisis), and it seemed to be so,” Frey said. “So much to the city and their commitment to the business community.”
The program was created last year when the COVID-19 pandemic swept across the state, forcing many businesses to temporarily close. Thousands of Bartholomew County residents have been laid off without jobs as the local unemployment rate skyrocketed to around 17% in April 2020.
Columbus City Council approved the creation of the program and the use of $ 1 million from city funds for the program on April 21, 2020. The next day, the city began accepting applications through its website and received 15 applications within the first 24 hours.
City Councilor Tom Dell, co-owner of Dell Brothers, which will later receive a loan under the program, abstained from voting.
The city’s money for the loan program included $ 250,000 from the Economic Development Income Tax Fund, $ 350,000 from the city’s capital repair fund and $ 400,000 to fund the city’s redevelopment, city officials said in a previous interview. Funding for the overhaul of $ 350,000 will come from deferring this amount from planned projects in 2020 and 2021.
To be eligible for loans, companies had to be in business from January 1, 2020, have fewer than 50 employees, no more than $ 2 million in gross revenue, and show a decline in revenue in 2020 due to the pandemic. Among other criteria, priority was given to small businesses with higher credit ratings, demonstrated financial need, employee retention, financial ability to return or continue working.
The loan recipients were required to use the funds for “routine and necessary business expenses,” not debt consolidation, and were required to commit to stay open and retain employees, according to the program’s website.
A total of 43 businesses received loans as a result of the first round of applications in April 2020. Six more loans were made in the second round of applications last September. One company received loans in both rounds, Frey said.
The total amount provided to companies in both rounds of applications was limited to US $ 25,000.