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Decatur Loan Program distributing funds to businesses

Business COVID-19 Decatur

Decatur Loan Program distributing funds to businesses

Decatur City Hall
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By Cathi Harris, contributor

Decatur, GA — The loan program established by the city of Decatur to help small businesses affected by the COVID-19 pandemic is beginning to distribute funds to the businesses whose loan applications were accepted.

“The majority of loan documents have been signed and we have begun the process of administering the wire transfers,” Decatur Director of Planning and Economic Development Angela Threadgill told the Decatur Downtown Development Authority Friday. “That should be happening today for the majority of those businesses.”

The program was able to issue no-interest loans to 27 city businesses, totaling $549,000 of the $550,000 available, said DDA board member Conor McNally, who also served on the program’s oversight committee. The committee retained $1,000 to cover the administrative costs of managing the loan program.

The city-funded the program with $400,000; the DDA contributed an additional $100,000, and $50,000 was raised from community donations to the program. The average loan amount was $20,000.

In total, 45 businesses submitted applications to the program that met all criteria for approval, with total requests for funding coming in just above $800,000. Because there were more requests for funding than funds available, the oversight committee decided to use a blind lottery to decide who would receive the loans.

Decaturish.com applied for a business loan and was turned down after losing out in the lottery process.

The lottery was conducted by the outside auditing firm that the city contracts with to audit its books, McNally said. All applications were assigned numbers and forwarded to the firm, which is based in South Carolina. 

“There was no chance anyone would know anyone involved [in the businesses],” McNally said.

Of the recipients, about 30 percent were restaurants and bars, about 20 percent were general retailers, and 23 percent were services of some kind, such as child care, afterschool care, music lessons, tax preparation services, McNally said. Another 13 percent were a mix of consulting and professional services, and then the remaining 14 percent were media and online businesses and some health care.

DDA Board Chair Chris Sciarrone wondered whether the committee considered granting loans of lower amounts so that all applicants could have received a loan, even if lower than the amount requested.

“We did consider it, but our feeling was that with loans amounts between $10,000 and $20,000, which are not insignificant amounts, but still relatively small, we didn’t want to do something watered down where people were getting loans of two or three thousand dollars,” McNally said. 

The loans that were granted still did not make up the majority of revenue those businesses lost due to the closures, he added. 

“It was very evident from looking at these applications that there is a lot of pain going on out there” McNally said. “There is real difficulty going on. We have seen some incredible creativity from these small businesses in finding new ways to generate revenue. But when you take small businesses and whack 60 or 70 or 80 percent of commercial revenue. It is a very difficult situation. There is dire need and more than we were able to help with this program. It was very difficult to notify those who did not get the loans, because everyone needed it.”

According to the terms of the program, the businesses will have to repay their loan within four years, but are not required to begin repaying until 12 months after the state declaration of emergency expires, McNally said. As the governor just extended the state’s emergency order into July, they would only need to begin repayment in July of 2021 at the earliest.

In other news, Threadgill presented a draft budget for consideration by the DDA board. The development authority’s fiscal year runs from June to July, and the final budget must be approved at the next DDA meeting on July 10.

The proposed budget predicts a 10 percent drop in income from last year, Threadgill said, and also anticipates that the authority will want to rebuild its fund balance depleted due to the participation in the emergency loan program.

The authority derives most of its income from an allotted percentage of the city’s property tax digest, with additional income from some property that it leases to commercial tenants in Decatur.

The city expects slightly lower property tax receipts and, while all of the DDA’s commercial spaces are currently leased, one of the spaces at 115 Clairemont Avenue was vacant for a significant time last year and the DDA’s sublease arrangement for the property at 306 East Howard Avenue is ending.

To meet the anticipated reduction in revenue while still rebuilding its reserves, Threadgill is recommending that the board consider cuts to its line items for professional service fees and contractual expenses, as well as reducing the expenses for special events.

“The DDA does help out with many of our downtown events and those that occur in other commercial districts in the city,” Threadgill said. “Many of those have been canceled or moved online due to the pandemic.”

 

The professional fees include expenses related to the law firm of Williams Teusink for legal services and the design services that have been contracted for holiday events and business promotions.

The authority has also worked with City Manager Andrea Arnold to restructure the management fees paid to the city for the personnel and operational services it provides to the DDA. The management fees line item in the proposed budget is reduced to $377,000 from $382,000.

“The city manages our payroll for DDA staff,” Threadgill explained. “And they help us with managing some of the operating expenses [then] they bill us back and we reimburse them.”

Threadgill recommended leaving the budget for advertising unchanged and increasing the amount available to support local nonprofits from $7,500 to $10,000.

“Lot of nonprofits that directly help us with  economic and workforce development and we would like to continue supporting these organizations,” she added.

Overall, the proposed budget includes an estimated 10 percent reduction in revenue with reductions in expenditures of 17 to 20 percent, she said. The proposed budget for next fiscal year is $1.03 million compared to last year’s $1.24 million.

In upcoming business news, Downtown Program Manager Shirley Baylis said that a Decatur resident is spearheading the event Dine Out Decatur on Saturday, June 20.

“Jeremy Kelly, a Decatur resident who works for Sysco and works with many Decatur restaurants, wanted to do the event to educate the public about the safety precautions that restaurants are taking and that outdoor dining is another way to be safe while eating out,” Baylis said.

Kelly is preparing a postcard that will show which restaurants are participating and also feature a QR code that people can use to order food to-go, if they prefer. Sysco will also have a table at the event to distribute masks and educational materials about remaining safe while dining out.

Kelly will present more information to the Decatur City Commission on Monday night at its regular meeting.

“If you sign in a little early [to the online meeting], you should be able to hear more information,” Baylis said.

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