MONTGOMERY COUNTY — The Montgomery County Legislature voted unanimously on Tuesday night to approve the creation of a $240,000 COVID-19 Pandemic Loan Program.
Prior to the vote, Montgomery County Economic Development Director Ken Rose explained the concept of the loan fund to the legislature.
“The County Executive [Matt Ossenfort] contacted me on Friday to see if we could utilize any of our loan funds for these purposes,” Rose said. “We looked at what had been done in previous years: a flood bridge loan program of $200,000 that had been done [in the past].”
Rose said the Montgomery County Industrial Development Agency (MCIDA) has about $1.2 million in its revolving loan fund, which was established using federal grant money in the 1990s. He said a committee of Ossenfort, himself and county legislators formed a plan of loaning out money to small businesses in Montgomery County for the purpose of dealing with costs associated with COVID-19, particularly capital investments in equipment required for enhanced safety regulations required by New York state.
“We came up with the idea of authorizing up to $10,000 per business at a 1 percent interest rate in order to comply with New York state’s guidelines,” Rose said.
While the loan program will not require any payments for the first six months, repayment in full must be made within two years.
Rose said one major difference between this program and the typical MCIDA loan application procedure will be an expedited approval process.
“To streamline things, to make them quicker, these will not come through the MCIDA for their review and approval before they go to the county executive’s office,” Rose said. “So, the loan applications will come to our office — we will review them, as we normally do, work with the county attorney as well on this — then we will make the recommendation to the county executive as to whether or not to approve these loans.”
The resolution passed by the legislature explicitly grants Ossenfort the authority to approve the loans.
“If you approve this, the county executive will have the authority to sign these loan documents for these various businesses,” Rose said.
Legislature Chairman Joe Isabel, who represents District 8, asked Rose if the loan pool will be available only to local companies in Montgomery County or also to larger “chain” companies with local branches.
Rose said the pandemic revolving loan fund will be open to any business that operates in Montgomery County under the same rules as the MCIDA revolving loan fund, which means an eligible business must be a commercial or industrial activity which employs people in the production, sale, distribution or handling of goods or services for sale to individuals. The purpose of the loan must also be to help pay for actionable items outlined in the NYS Forward Plan and borrowers will have to demonstrate that their purchase or upgrade is associated to the business safety plan for their specific industry as outlined per New York State re-opening regulations.
District 7 Legislator Michael Pepe asked if the pandemic loan fund will have a minimum amount that a business could borrow.
“We did have that discussion internally, and obviously there’s a lot of paperwork associated with these loans and [a minimum] is something we can discuss, but at the same time if someone potentially needed a $500 loan, a ‘mom and pop’ business, we didn’t want to deter them from being eligible for this, so I think we’ll look at it on a case-by-case basis,” Rose said.
“This is a great idea, and it certainly satisfies a need out there,” Pepe said.
District 2 Legislator Brian Sweet he wants to make sure there is a threshold for the size of business the money will be loaned to, in order to avoid what he considers some of the well publicized abuses of the pandemic loan program set up by the federal government earlier this year.
“The amounts that we’re going to be loaning out are so small [up to $10,000], that I don’t anticipate companies with over 50 employees applying for any of this,” Rose said.
Ossenfort said the initial idea for the pandemic loan fund arose from discussions about the safety requirements for gyms and fitness centers reopening. He said some of the equipment investment, including air quality equipment.
“These gyms have been closed for five months, and now they’re expected to spend thousands of dollars on these [air] filtration systems, and things of that nature, and so with respect to the gyms I don’t see the Planet Fitnesses or even quite frankly the Alpin Hauses of the world applying — it’s really going to be focused on the ‘mom and pops’,” Ossenfort said. “I don’t think there is necessarily a [legal] way to have a clear delineation of that…”
After the details of the program were discussed, District 3 Legislator John Thayer proposed expanding the amount of money available for the pandemic loan program from the initial proposal of $100,000 to 20 percent of the size of the county’s $1.2 million MCIDA revolving loan fund, approximately $240,0000. Thayer said he believes the bigger pandemic loan fund will have a greater impact, and the rest of the legislature unanimously agreed.
Rose said the $1.2 million MCIDA revolving loan fund currently has 10 outstanding loans, which currently provide the fund with about $36,000 monthly in interest payments alone.
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