As small business owners grow impatient for federal COVID-19 funds to trickle in, the Milpitas City Council has looked to become the next Bay Area city to adopt a small business relief program…
Milpitas councilors last Tuesday voted unanimously to implement a $200,000 proposal to fund eligible small businesses. Small business owners who apply will have the potential to receive up to $5,000 through the program. City officials have yet to work out interest rates for the loans—if any—as well as the terms of each loan.
“The city council and staff see this as an investment in the community and our business community,” said Alex Andrade, the director of the city’s Office of Economic Development, about the loan program. “It will put people back to work and put dollars in their pockets to shop local. It helps our restaurants, it helps our retailers, and other businesses.”
Those dollars, Andrade added, will help to benefit the city as a whole through its sales tax.
“It’s an important ecosystem that we’re talking about right now,” he said.
The program, which will be paid from a Department of Housing and Urban Development grant awarded earlier in the year, will be administered jointly by two local nonprofits: Enterprise and San Francisco-based Kiva. Loan allocations will seek to prioritize “longtime” small businesses.
“This money is really going to be the lifeline for small businesses,” said Councilmember Karina Dominguez at the council’s April 21 meeting—the previous time the issue was brought to council. “They are the backbone of Milpitas.”
Tuesday’s meeting served to approve the program, originally proposed in March. Loans will not be granted to businesses that exceed the program’s maximum net worth requirements or have participated in past illegal activity. And only owners who have physical storefronts will be eligible.
Funds are required to be used by owners for operating expenses such as rent, payroll, and other business-related costs.
Similar programs have already been implemented or proposed in neighboring Santa Clara and nearby Mountain View and Sunnyvale.
Andrade hopes Milpitas’s plan will serve “as a bridge” to help small business owners while they wait for federal aid to reach them.
Business owners nationwide have widely found themselves frustrated by the pace and brevity of the Payment Protection Program (PPP), the Small Business Administration’s COVID-19 loan initiative.
The PPP, which allocated $349 million in emergency loans for businesses across the country, ran out of funds in just 14 days. And early reports show only 3 percent of California’s 3.7 million small businesses were approved for PPP loans before funds were exhausted.
Meanwhile, many small business owners who were approved for loans are still waiting for money to hit their bank accounts.
“Those dollars aren’t coming in quick enough,” Andrade said in April.
The PPP has also faced criticism for doling out purported small business funds to large corporations such as Shake Shack and luxury hotel chains.
That’s forced many local governments and tech giants like Facebook to take matters into their own hands by starting their own loan programs.
“This loan program illustrates the council’s commitment to the business community and the local workforce,” said Andrade in a follow-up interview with The Beat. “The City of Milpitas recognizes that the business community is an important part of the fabric of our local community.”
Details on how the funds will be doled out and who will receive them will be worked out in the weeks to come. The city has no official timeline as of yet for distributing funds.