HomeMy WebLinkAbout2021-04-27; City Council; Resolution 2021-094RESOLUTION NO. 2021-094
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING MODIFICATIONS TO THE COVID-19 SMALL
BUSINESS LOAN PROGRAM
WHEREAS, on February 14, 2020, the San Diego County Health Officer declared a Local Health
Emergency as a result of the spread of COVID-19; and
WHEREAS, on March 4, 2020 Governor Newsom proclaimed a statewide state of emergency as
a result of the spread of COVID-19; and
WHEREAS, on March 16, 2020, the Director of Emergency Services proclaimed a local state of
emergency as a result of the COVID-19 pandemic, which the City Council subsequently ratified and
extended; and
WHEREAS, on March 19, 2020, Governor Newsom issued Executive Order N-33-20 directing
individuals living in California to comply with a State Public Health Officer order to stay at home except
as needed to facilitate authorized, necessary activities or to maintain the continuity of operations at
critical infrastructure sectors; and
WHEREAS, on May 4, 2020 Governor Newsom issued Executive Order N-60-20 allowing non-
essential businesses to reopen in four stages in compliance with criteria set by the State Public Health
Officer and based on certain public health criteria being met on a county-by-county basis; and
WHEREAS, on June 19, 2020, dine-in restaurants, alcohol-serving businesses offering dine-in
meals, personal care services businesses and other businesses in the County of San Diego were
permitted to reopen subject to compliance with state issued guidance; and
WHEREAS, on July 13, 2020 a statewide public health officer order was issued closing bars, pubs,
brewpubs, and closing indoor operations of dine-in restaurants, wineries, tasting rooms, family
entertainment centers, movie theaters, zoos, museums, and cardrooms; and
WHEREAS, the State of California has issued industry guidance for businesses that are allowed
to reopen that require modification to business operations, which has a direct cost and may have an
impact on the space in which businesses may operate thus impacting revenue; and
WHEREAS on December 6, 2020, the State of California enacted a Regional Stay at Home Order
for Southern California mandating additional closures and modifications for businesses due to ICU
capacity dropping below 15 percent in a region; and
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WHEREAS, the effects of the Regional Stay at Home Order have continued to have an impact on
Carlsbad businesses operations; and
WHEREAS, the City of Carlsbad unemployment rate spiked to 12.3 percent in April of 2020 and
has not yet recovered to the 2019 average of 2.9 percent; and
WHEREAS, the City of Carlsbad conducted surveys of businesses impacted by COVID-19 in
November 2020 and April 2021 and found that 46 percent of companies indicated the need for more
than $25,000 in additional financial relief to maintain operations over the next six months; and
WHEREAS, 66 percent of businesses surveyed indicated that they experienced a revenue
decrease of more than 25 percent due to COVID-19; and
WHEREAS, the City of Carlsbad approved a resolution creating an Ad Hoc City Council Economic
Revitalization Subcommittee on April 7, 2020; and
WHEREAS, the Ad Hoc City Council Economic Revitalization Subcommittee has met 33 times
since it was created and provides input on the city's COVID-19 related economic relief efforts and
recommendations to the City Council; and
WHEREAS, it is in the public interest to take steps to ensure local businesses remain
economically viable during the COVID-19 pandemic state of emergency; and
WHEREAS, there is a public benefit to providing economic relief to local businesses impacted
by the COVID-19 health emergency, so they may continue providing jobs and tax revenue to the City
of Carlsbad which funds public services; and
WHEREAS, there is a public benefit to providing access to operating capital in the form of low-
cost or no-cost loans to allow businesses to fund the cost of payroll, utilities, rent, mortgage interest,
insurance, and business operation modifications or adaptations necessary to comply with the public
health orders; and
WHEREAS, adopting this resolution is necessary and appropriate to mitigate the immediate
threats to the public health, safety, and welfare of residents and local businesses from the significant
economic impacts of the COVID-19 pandemic by providing economic relief and providing resources to
remain open in compliance with the public health orders.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
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2.That conducting a small business loan program to mitigate the impacts of COVID-19
serves a public purpose and provides a public benefit.
3.That the parameters for the small business loan program are modified as shown in
Attachment A.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 27th day of April, 2021, by the following vote, to wit:
AYES: Hall, Blackburn, Acosta, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
MATT HALL, Mayor
BARBARA ENGLESON, City Crerk
(SEAL)
April 27, 2021 Item #2 Page 16 of 18
ATTACHMENT A
CITY OF CARLSBAD
COVID-19 SMALL BUSINESS LOAN PROGRAM
A. LOAN PARAMETERS
The following are the parameters for all loans issued under the City of Carlsbad's COVID-19 small
business loan program. They are designed to ensure businesses that need resources during the
pandemic receive support. Based upon consultation with CDC Small Business Finance, a survey of
businesses, and specific information from business that have applied for loans, the following
program structure provides for significant participation and deployment of resources while
addressing the risk of significant defaults.
1.All applicants must have a valid City of Carlsbad business license or show proof that they have
applied for a business license or business license renewal at the time of application.
Businesses must have a valid business license before funding is approved.
2.All applicants must demonstrate they have been lawfully operating for at least six months.
3.All applicants shall comply with all laws, regulations, and orders applicable to it, including all
public health orders.
4.All applicants must be in good standing with the city.
5.Nationally owned chain businesses or franchises are ineligible; however, chains or franchises
that are located in Carlsbad and have a business owner that lives within San Diego County are
eligible.
6.Loan funds may be used for operational expenses, such as rent, payroll, mortgage interest,
utilities, insurance, the cost of complying with public health orders, and the cost of activating
business operation areas. Construction-related work paid for with loan funds must comply
with state prevailing wage laws.
7.The first loan repayment may be deferred up to 180 days from the date the loan is issued.
8.Applicants may apply for one extension of the repayment deferral period through CDC Small
Business Finance (CDCSBF), subject to approval of the loan. Approval of the additional deferral
will be based on the professional determination of CDCSBF that such deferral is warranted to
meet the program goals, including reducing the risk of default, with validation by city staff. If
an additional deferral is approved, the loan will be re-amortized with a new repayment
schedule not to exceed the original term of the loan
9.The city offers small business microloans of $5,000 to $10,000 for businesses with gross
receipts of $2,000,000 or less, or 15 employees or less, and terms of 0% interest if paid back
within six months, 1% if paid back within twelve months, and 2% if paid back within 30
months.
10.The city offers small business recovery loans of $10,000 to $50,000 for businesses with gross
receipts of $5,000,000 or less and fewer than 50 employees and terms of 2% interest if paid
pack within twelve months and 3% if paid back within 60 months.
11.Applicants may apply for and receive both the small business microloan and the small
business recovery loan if all relevant qualifications are met however, applicants may not apply
for and receive more than a combined total of $60,000 across all loan products.
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ATTACHMENT A
B. LOAN APPLICATION EVALUATION AND DISPOSITION
CDCSBF will review loan applications based upon the goal of deploying resources to businesses
that are affected by COVID-19 while considering factors that present a high risk of default. These
factors include:
1.Minimum 640 FICO score but will engage with applicants that have a lower score to
understand mitigating factors that may affect the risk of default
2.Bankruptcy must be at least three years old but will engage with applicants with more recent
bankruptcy to understand mitigating factors that may affect the risk of default
3.No open liens, judgments, or lawsuits that may present a high risk of default
4.Business owner will be required to sign a personal guarantee, or if there are multiple business
owners, the majority business owner will be required to sign the personal guarantee.
CDCSBF will provide a list of reviewed applications to the city for validation. Upon validation
CDCSBF, will generate the loan documents and route them for signature by the borrower and
deputy city manager, administrative services. CDCSBF will service the loan portfolio and will
provide monthly reports and invoices to the city for their services.
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