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Cities and nonprofits throughout Larimer County are teaming up to create a $5 million loan fund to help the smallest businesses hurt by the COVID-19 crisis.
The fund is being seeded with more than $2 million from the city of Fort Collins, Bohemian Foundation and Fort Collins Area Chamber of Commerce. The remaining $3 million is expected to come from other county municipalities, banks, foundations, private businesses and individuals.
Fort Collins Economic Health Director Josh Birks said the city has committed $200,000 to go into a “loan loss reserves” portion of the fund to cover any write-offs or bad loans.
The chamber contributed $25,000 from its Northern Colorado Prospers Initiative.
“Small businesses are really important to the livability and economy of our area,” Chamber President and CEO David May said. Small businesses “are in a tough place not of their own making. We want them to make it through this very challenging time.”
While some details are still being finalized, Birks said the fund is intended to help those businesses with between one and 20 employees who “are struggling to access federal programs.”
Qualifying businesses could be eligible for up to about $50,000 in loans at 3.5% interest and no origination fee, Birks said. “It’s a very low-cost barrier to entry.”
Based on similar national lending programs, Birks estimated the average loan would likely be between $28,000 and $30,000, which would mean between 150 and 160 loans could be awarded.
Larimer County currently has 10,834 business establishments with 20 or fewer employees, comprising 88% of all businesses, Birks said.
With the first round of federal Payroll Protection Plan, or PPP, already gone and a second PPP just passed by Congress, not all local businesses are expected to access the fund. Businesses receiving PPP money would not be prohibited from applying for the local fund but the intent is to lend a hand “to those not getting (federal) help,” Birks said.
The county loan fund could help “fill the gap.”
The fund is also not meant to be a low-cost loan for businesses that are in pretty good shape and “not impacted by the crisis,” Birks said. “There will be a heavy focus on recovery and rebuilding businesses.”
It has not been announced when applications may begin to be accepted.
One piece of the fund yet to be finalized is some kind of principal deferral program for six to 12 months so businesses would only have to make a modest payment as they get back on track.
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Small businesses throughout Larimer County would be eligible to apply, Birks said. “We will be looking to serve those in most need” regardless of geography, he said. “All partners recognize that the entire county benefits by supporting the entire county. Fort Collins does better when the county does better. That’s the focus more than on ensuring each community gets their proportionate share.”
This fund is in addition to the $110,000 Fort Collins Small Business Relief and Recovery Fund through Colorado Lending Source, to provide up to $10,000 low-interest loans to help protect jobs and businesses in Fort Collins.
Funds for that program had been exhausted by Friday.
Pat Ferrier is a senior reporter covering business, health care and growth issues in Northern Colorado. Contact her at email@example.com. Please support her work and that of other Coloradoan journalists by purchasing a subscription today.
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