The Golden Urban Renewal Authority has approved the creation of a new loan program that will allow Golden businesses to receive loans of as much as $30,000 to help recover from COVID-19. Under the …
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The Golden Urban Renewal Authority has approved the creation of a new loan program that will allow Golden businesses to receive loans of as much as $30,000 to help recover from COVID-19.
Under the program, funded and operated jointly by GURA and the Downtown Development Authority, independently-owned food, retail, health care and personal services (such as salons and spas) businesses located in Golden will be eligible for a $5,000 loan.
However, businesses may also apply for loans equal to 75% of their 2019 sales tax payments up to $30,000. Those businesses that don’t pay city sales tax can instead apply for a loan equal to 2.25% of their 2019 revenues up to $30,000. Individually-owned franchises are also eligible to apply for the loans. Corporate-owned franchises and home-based businesses are not.
“I think this is the right thing to do with the funds that we have in order to prevent blight, which is our mission, and support our community,” said GURA member Pamela Gould.
All loans issued by the program will be for four years with no interest accruing or payments due until the start of 2021. The loans will have an interest rate of 3.25%. Collateral will not be required buthe loan agreement will include a personal guarantee.
Steve Glueck, Golden’s Economic and Community Development Director said it makes sense for GURA and the DDA to partner on the loan program because the purpose of both groups is to support economic development and their funding comes from property taxes, which are less impacted by the COVID-19 crisis.
The city government, in contrast, is facing an “uncertain revenue situation” because of its dependence on sales tax that would make it impractical for the city to administer such a program. Glueck said that in addition to helping support business in Golden, the DDA and GURA will also get their investment back once the loan is repaid, although he acknowledged it is unlikely all of the loans will be repaid because some businesses will inevitably fail even if they recieve a loan.
“We need to expect a certain amount of default,” Glueck said. “It is my belief that we will get back almost all of our principal back and probably not more than that because of the default rate, but it would be nice to get a little more than our principal back.”
Glueck said the DDA will review the intergovernmental agreement that will set up the loan program this week and he expects them to approve it. Assuming that happens, the city will begin accepting loan applications on April 26 and continue to accept them through Sep. 1 with loan funds being dispersed upon approval.
GURA unanimously approved the creation of the loan program, although one member expressed some hesitation about whether the loan amount was substantial enough.
“I don’t want to create some cumbersome opportunity for a small amount of money,” said GURA member Daniel Brisson. “Frankly, the $5,000 seems fairly small. Just imagining payroll for a month or two or five, I just want to be sure the $5,000 is substantial enough to keep some of our small businesses surviving on Main Street.”
Under the proposed agreement GURA and the DDA will contribute a total of one million dollars to the fund.
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