Small businesses in certain Minneapolis neighborhoods can now apply for no-interest, forgivable loans to help cover expenses as they deal with financial losses from the coronavirus pandemic.
To qualify, they must have 20 or fewer employees or make $1 million or less in annual revenue. They must also be located in an area already targeted for special assistance, such as a Cultural District, Promise Zone, Green Zone or area with concentrated poverty.
The city expects to give loans of up to $10,000 each to 220 to 440 small businesses. If more apply, the city will hold a lottery.
“I’m well aware that demand will far exceed the supply of dollars we have available,” Minneapolis Mayor Jacob Frey said. That’s why the city has tried to target its assistance, he said. “One of the most crucial roles local government can play during this crisis is to complement the work that’s happening at the state and federal legislatures.”
The city also expects to start offering emergency assistance for renters later this month. Both are part of a $5 million effort to help people who are likely to be hit hardest financially.
The aid comes at a time when the city is bracing for its own financial crunch. While the need for assistance is growing, the city is predicting a dramatic drop in tax revenue and the rise of extra, unexpected expenses as it tries to buy protective equipment, cleaning supplies and other items to help with its response efforts.
As of midweek, the city had logged nearly $1 million in emergency spending, some for supplies that have been delayed as cities and states across the country compete for the same products.
“There has been a waiting period of two to six weeks on certain items, such as disinfectants, hand sanitizers and masks,” said city spokeswoman Sarah McKenzie. “These are starting to come in at smaller quantities now and ... expected to pick up the pace soon.”
The city is receiving some aid from the state, but that won’t cover all the expenses.
On Friday, the City Council voted to accept a roughly $400,000 state grant to help cover the costs of emergency supplies and staff time. The city is also considering setting aside some of it to help support COVID-19 testing efforts or provide vaccines, if one is created.
The city expects to lose up to $200 million in tax revenue from business closures and the halt in travel and entertainment while people stay at home to slow the spread of COVID-19. That number could change, depending on the duration of the pandemic.
Frey has implemented a hiring freeze, though exceptions could be made if more people are needed to help with the coronavirus response. The city is halting nonessential spending. Elected officials and other employees who aren’t part of a union are likely to have their wages frozen through 2021. The city plans to meet with its unions to discuss similar changes for those workers.
Frey said the city is not looking at furloughs or layoffs but noted, “It’s impossible to know the full scope of how the recession will affect us.”
To apply for the new loan program, business owners can visit minneapolismn.gov/coronavirus/gap-funding#business.