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As many cities across Minnesota seek to help their local economies, some assistance from the state may be on the way.
The House Jobs and Economic Development Finance Division held a hearing on June 3 on an amended proposal to provide relief for small businesses impacted by COVID-19. The proposal is nearing agreement between the House and Senate and will likely be considered during a special session.
The new proposal would authorize $62.5 million — $2.5 million from the Small Business Emergency Loan Program and $60 million from the federal Coronavirus Relief Fund — for small business grants. The proposal is supported by the League, as many cities are seeking to assist their local businesses and restore the local economy, which has been severely hurt by the pandemic.
Change from loans to grants
The initial proposal for small business assistance was passed out of the House on May 7 during the regular session as a part of HF 1507, the COVID-19 Economic Security Act, but did not receive Senate action. The bill included $55 million in partially forgivable loans to small businesses via the Department of Employment and Economic Development’s Small Business Emergency Loan Program.
The author of HF 1507 and the new small business grant proposal, Rep. Zack Stephenson (DFL-Coon Rapids), noted during the hearing that the switch was made from loans to grants due to the guidance issued by the federal government that barred the usage of Coronavirus Relief Funds for forgivable loans, given the time frame that the funds need to be expended.
Highlights of the proposal
- Provides $62.5 million in total funding, with $2.5 million coming from the Small Business Emergency Loan Program to cover up to $2.2 million in agency administrative expenses.
- Makes $60 million from the federal Coronavirus Relief Fund available for small business grant funding, split 50/50 geographically, with $30 million for metro small businesses and $30 million for Greater Minnesota businesses.
- Allows grants to be made for up to $10,000 to individual businesses that have 50 or fewer full-time workers, have a permanent physical location, are owned by a permanent resident of Minnesota, and can demonstrate financial hardship resulting from COVID-19.
- Gives priority to businesses that were unable to operate at 51% capacity as of May 18, 2020, which includes bars, restaurants, gyms, and places of public gathering.
- Sets aside allocations for certain business types, including $18 million for micro-businesses (fewer than six employees); $10 million for minority business enterprises; $2.5 million for veteran-owned businesses; $2.5 million for women-owned businesses; and $2.5 million for retail space and food markets with an ethnic emphasis.