September 30, 2020
Since the outbreak of the COVID-19 pandemic, 1.4 million small businesses have either closed of suspended operations according to a study by Oxxford Information Technology Ltd. It is expected that as many as four million small businesses could be forced to shut down permanently by the end of the year, or about 13 percent of the country’s small businesses.
Richfield’s Economic Development Authority (EDA) is doing everything it can to provide financial assistance to the city’s small businesses as they try and weather the global health crisis. The authority has authorized a second round of small business forgivable loans.
“Businesses of all shapes and sizes are seeing a drastic reduction in income during the COVID-19 pandemic,” explained Richfield Chamber of Commerce Chairman Greg Worthen. “Richfield was one of the first cities in Minnesota willing to help its small businesses through this crisis in the form of a forgivable loan program. The program shows we are a business-friendly community.”
Due to the ongoing nature of the pandemic and its impact on revenue, some Richfield business owners have reached out to the authority to express their concerns about their business’s long-term financial viability.
At the authority’s September 21 meeting, the group dedicated another $118,000 for small business forgivable loans. The EDA Executive Director John Stark estimates that this will provide financial assistance for between 25 and 30 businesses.
“I applaud Richfield’s small businesses for finding new and creative ways of operating during the pandemic,” said Stark. “However, in these uncertain financial times, they still need help.”
Details of the Small Business Assistance Forgivable Loan Program include:
- $2,500 for the first employee and $500 for each additional employee up to $7,500
- Available to for-profit businesses that have operated in Richfield for at least one year
- Applicants must be registered with the Minnesota Secretary of State’s Office
- Preference will be given to this businesses impacted by Minnesota Executive Orders 20-04, 20-08 and 20-09 (Stay-At-Home Orders), including, but not limited to;
- Coffee houses and cafes
- Beauty salons, barber shops, nail salons and spas
- Fitness centers and recreation facilities
- Loans carry a zero percent interest rate until December 31, 2021
- Up to 100 percent of the loan is forgivable in 2020 if the business can demonstrate expenditures on staffing, COVID-19 related expenses or visible capital improvements
- Up to 100 percent of the loan is forgivable in 2021 if the business reestablishes itself
The previous round of loans saw 36 businesses receive financing averaging more than $3,700 per business. Of those businesses, 61 percent of the recipients owned commercial space in Richfield; the remaining 39 percent were home-based businesses.
Sixty-seven percent of first round loans were made to women-owned businesses.
Twenty-eight percent of the original loans were awarded to businesses owned by people of color.
“I have heard a lot of gratitude from the city’s business community who received loans when the program was first established this past spring,” remarked Mayor and EDA member Maria Regan Gonzalez. “Many of these owners did not say the same about other assistance programs. In fact, some other assistance programs caused additional stress, as opposed to relieving it.”
Richfield’s EDA was formed in 2018 to support projects and create programs to help bolster the local community. In its first two years, the EDA collected a tax levy, but choose to accumulate the majority of those funds in a reserve fund for unforeseen needs or opportunities. This sound financial planning has permitted the EDA to provide $250,000 for the two rounds of COVID-19 small business forgivable loans.
Loan applications must be submitted to the Community Development Department by 11:59 p.m. on Monday, October 19, 2020.
For more information or to apply, visit: www.richfieldmn.gov/departments/community-development/economic-development/covid-19-resources-for-businesses/
This press release was produced by the City of Richfield. The views expressed here are the author’s own.