After a greatly stressful year, 2021 will begin with many economic opportunities for small business owners in Scotts Valley.
The newest federal stimulus package, passed by Congress on Dec. 21, will begin to benefit small business owners and many others this January. The state has begun a Small Business COVID-19 Relief Grant Program and began accepting applications Wednesday. Additionally, the City of Scotts Valley is working in conjunction with other jurisdictions to bring a revolving door loan to the county.
Scotts Valley Mayor and Scotts Valley Economic Task Force Subcommittee member Derek Timm said some businesses are “under tremendous pressure… This could be the little bit that helps them get through.”
The $900 billion federal stimulus package, signed by President Donald Trump Sunday, allocates $284 billion for a second round of Paycheck Protection Program (PPP) loans for small businesses, which are defined by less than 300 employees. Small businesses can qualify for the new loans by providing receipts with a 25% gross reduction from any of the first three quarters in 2020, compared with 2019.
Application and disbursement details are still forthcoming. Timm advised business owners to communicate with the same bank they worked with to receive the original PPP loan and make sure they are ready for the next application window.
“As soon as we have [more information] we’ll send it out right away,” Timm said.
There are several differences for small businesses in the new stimulus package compared with last spring’s package.
“There will be a new simplified forgiveness program for loans under $150,000, and the EIDL (Economic Injury Disaster Loan) forgiveness is no longer subtracted from PPP forgiveness,” Timm said. “PPP recipients will be able to claim ordinary deductions for business expenses paid with PPP funds, even if that loan is forgiven. Previously, owners received PPP and gave money to employees to protect payroll, but there wasn’t an incentive. This gives them the incentive to.”
In addition to loan policy changes, this new package will provide support for other hard-hit industries. It has set aside $15 billion in grants for performing arts, such as live venues and movie theaters. Business associations such as a chamber of commerce are now eligible for PPP loans and food service can receive PPP loans up to three and a half times their monthly payroll, instead of two and a half.
From Dec. 30 to Jan. 8, small businesses can apply for a state grant program, the California Relief Grant Program.
“The goal is to give out money first to sectors that have been most impacted by the pandemic and there’s been a lot of underserved small business groups that haven’t gotten monies,” Timm said. “This is a fast trigger program to get money out to small businesses. While the window is small, the application appears to be pretty easy.”
He added: “It’s like they’re telling owners, ‘Happy New Year! Now, get to work.’”
Grant size depends on annual revenue. Businesses with a total yearly revenue under $100,000 are eligible to receive a grant up to $5,000. Businesses between $100,000 to $1 million can receive up to $15,000, and between $1-2.5 million in revenue can receive up to $25,000.
The City of Scotts Valley has also been working closely with neighboring jurisdictions to receive a revolving door loan from the National Development Corporation (NDC). Once in effect, $2 million will be available to the County, which will increase up to $12 million once the program is fully activated.
The program is still being finalized, but Timm expects to receive final details on the federally funded program by mid-January.
“This will be a non-collateralized, 7-year loan, at a minimum of $35,000, with a nominal interest rate,” he said.
At the onset, about $200,000 will be available for Scotts Valley businesses and the Chamber of Commerce will manage the application process.
“A business can borrow without risking any assets. This is meant to be a bridge to get businesses through the final months of the pandemic as people are getting vaccinated and restrictions are reduced,” he said.
For Dedra Bennet, co-owner of Zinnia’s Gift Boutique, these opportunities hold promise.
“Given that [pandemic restrictions] may extend longer, we are looking into loans and grants,” she said. “However, we haven’t been able to look through all of them yet, with our busy fourth quarter and holiday season.”
During the first shelter-in-place closures, Bennet furloughed all employees. She’s since brought them back, to assist many local shoppers with their holiday purchases.
“We saw many guests and customers that we see and some that we don’t,” she said. “It was really nice the amount of people that pledged to shop local… This community has supported Zinnia’s and me so much through the year. We’ve had highs and lows, but have been very fortunate with customers and offerings.”
Questions from small, Scotts Valley businesses about application processes can be directed to the Scotts Valley Chamber of Commerce, at [email protected] or 438-1010.