The Board of Charles County Commissioners voted on Tuesday to allocate $300,000 from the county’s fund balance for grants to county businesses and nonprofit organizations and also approved new payback terms for two business development loans.
During a virtual open session held online due to social-distancing restrictions, the commissioners debated the merits of creating a relief fund that would help local businesses and nonprofits continue operating during the COVID-19 pandemic, which has seen Gov. Larry Hogan (R) call for the closure of schools and nonessential businesses and the restriction of travel to prevent the spread of the virus.
Commissioners’ Vice President Bobby Rucci (D) originally proposed setting aside $200,000 from the county’s snow fund or another source, but after further discussion among the commissioners he withdrew his motion in favor of one proposed by District 1 Commissioner Gilbert Bowling III (D) that would pull $300,000 out of the county’s fund balance — $200,000 for county businesses and $100,000 to be allocated to the Charles County Charitable Trust for distribution to county nonprofits.
The county’s economic development department has been tasked with developing the plan for allocating the business funds and will present the plan at the next county commissioner’s meeting on Tuesday, April 7. It was unclear from the discussion whether the Charles County Charitable Trust would also be required to present a plan to the commissioners for the nonprofit portion.
The amounts selected by Rucci and Bowling were admittedly arbitrary, in an effort to at least get something in place.
“Commissioner Collins, I think, had said 75 [thousand] and I didn’t think it was enough, so I raised it to two [hundred thousand],” Rucci said, when asked by District 3 Commissioner Amanda M. Stewart (D) how he had settled on $200,000 as an initial number. “And we might need three, four, five [hundred thousand]. Who knows? It’s an emergency. I have no idea … what these businesses need. I just want to get something moving instead of talking about it for a month.”
County fiscal and administrative services chief Jenifer Ellin cautioned the commissioners that the general fund balance was “slowly dwindling” and is currently projected at around $3 million, which is less than half the amount projected for the fund balance when the 2020 fiscal year budget was first passed last year. The general fund balance represents the difference between assets and projected liabilities for the county government’s largest operating fund.
Business loan term changes approved
The decision to establish the $300,000 relief fund was made during a presentation by the county’s Economic Development Department seeking the commissioners’ approval to temporarily modify two revolving loan fund programs that target economic development in the county:
- The Business Development Loan, which provides micro-loans of up to $35,000 to minority-, women-, and veteran-owned businesses for working capital, inventory, staffing, equipment, or other uses.
- The Target Industry Loan, which offers financing of up to $100,000 to companies seeking to expand or relocate in the county, for the same purposes as well as for real estate acquisition and improvement, acquisition of contract financing, and gap financing.
Existing Business Development Loan borrowers will receive an immediate two-month payment deferment and will have the opportunity to reduce their current interest rate to 3.25% fixed. After that, borrowers will be allowed to only pay interest for six months, after which EDD will review borrowers’ conditions to see if they are able to resume regular payments on both the loan principal and interest. New borrowers will be offered the same interest rate and a 24-month amortized repayment term.
As of January, according to EDD documents provided to the county commissioners, the six loans in the portfolio have a total outstanding balance of a little over $124,800, one of which is in default for over $25,000.
The new temporary terms for the Target Industry Loan cap the maximum loan amount at $15,000.00 and allow for interest-only payments for four months at the same interest rate as the business development loan, followed by a 24-month repayment term. As of January, there are two loans in this portfolio with an aggregate outstanding balance of over $144,000, one of which is in default for over $46,000.
To help speed up the loan process, and to accommodate social distancing and travel restrictions during the pandemic, EDD proposes acquiring additional web-based services from a financial services vendor that would allow applications to be submitted digitally. The county is in the process of securing quotes from suitable vendors, but in its proposal to the county estimated that the additional services could cost in the range of $15,000-$16,000 per year.
Economic development director Darrell Brown told TLR that a sunset date for the revised loan terms has not been set yet.
“We need to get money on the street at the federal, state, and local level as quickly as possible,” Brown said. “That’s what [businesses] are concerned about, the ability to respond to the demand as quickly as we possibly can.”
Business owners interested in applying for loans to carry them through the pandemic crisis should visit EDD’s financing page to learn more.
Too soon to propose recovery strategies, Brown says
With no immediate end in sight to the pandemic-induced restrictions on business operations, travel, and public gatherings, it’s too soon to think about what a countywide economic recovery strategy would look like, Brown told TLR.
“I think it’s a bit premature right now to focus on the recovery aspect because our concern now is helping businesses get through the process and making sure that they have the right information and access to the programs and funding that’s available,” Brown said. “But we do know that we’re going to get to the other side of COVID-19, and once we do and get feedback from the business community, then I think we’ll be in a better position to answer that question.”
EDD’s deputy director Marcia Keeth pointed out that at this stage, the long-term consequences of the pandemic are still very much unclear.
“You can’t design a recovery effort when you don’t know what, what you’re recovering from yet,” Keeth said. “Right now, our focus is just helping the businesses in the present.”
Keeth said that while all businesses in the county are struggling due to the pandemic, many have been able to innovate new ways of doing business online as a way to help bring in at least some revenue.
“The common denominator here is that small businesses need near-term operating expenses to be covered so that they can get through the crisis,” Brown said. “They’re all feeling that pressure to cover their operating costs and retain their employees. What we’re trying to do is make sure that the business community has access to federal programs, state programs, and the programs that we are working to develop.”
Brown and Keeth stressed that the staff of the economic development department has been teleworking throughout the pandemic crisis and will continue to be provide updates and information to the county’s business community through Facebook and Twitter. The department is also maintaining web pages on status updates for local businesses, resources available to local businesses, and links to the latest county information on the COVID-19 pandemic.
photo: Charles County Economic Development Department director Darrell Brown, left, and deputy director Marcia Keeth. (Charles County Government)