Costa Mesa small business owners hit by pandemic can seek loans up to $30K

You’ve got to spend money to make money — that’s the thinking of Costa Mesa officials as they embark on a plan to help independently owned businesses stay afloat during the coronavirus pandemic by offering small business loans up to $30,000.

City Council members approved Tuesday using $250,000 of a federal grant as seed money to assist eligible Costa Mesa businesses with annual revenues below $400,000 who have not received Personal Paycheck Protection or Economic Injury Disaster loans through the U.S. Small Business Assn.

“This kind of program is a life preserver for many of our small businesses that are right now really drowning,” Mayor Katrina Foley said of the program.

The funding comes from $668,658 in special community development block grants earmarked for Costa Mesa through the U.S. Department of Housing and Urban Development, as part of the coronavirus-related CARES Act.

Dan Inloes, the city’s economic development administrator, said the city will partner with the nonprofit OC Small Business Development Center to offer loan application assistance, if needed.

Costa Mesa will also partner with Main Street Launch, a community development financial institution that has agreed to act as lender and oversee the program on the city’s behalf in exchange for 15% of the total amount funded.

Meanwhile, the city will use its $250,000 investment to leverage grants and matching funds available through state and federal assistance programs, thereby growing the program, Inloes said.

Loans of up to $30,000 could have varying terms but would not exceed five years. The interest rate is estimated at around 2% to 3%, according to a staff report, and loans would have a four-month deferment window.

To be eligible, businesses must be independently owned, licensed brick-and-mortar businesses operating in good standing in Costa Mesa, not have already received federal coronavirus assistance, have fewer than 12 employees and have an annual revenue of $400,000 or less.

Preference will be given to nonessential businesses and those that have the greatest visibility or can directly impact the success or failure of other businesses.

Inloes said during the coronavirus pandemic, California Infrastructure and Economic Development Bank is providing a disaster relief guarantee program that will allow small businesses negatively impacted by the pandemic to access a loan guarantee of up to 95%.

That amount would be put back into the city’s fund to be eligible for reissue to other businesses, he added.

Councilman Allan Mansoor, who cast the lone vote against the program, said he’d prefer the city allow for a wholesale reopening of businesses and look at where else the federal assistance might be spent.

“I think it’s ironic that we’re talking about loaning money to businesses, but we won’t let them open,” Mansoor said, adding loans won’t help businesses that have already had to close permanently. “I have too many unanswered questions about this.”

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