Lexington approves $2.5 million stimulus program for small businesses hurt by COVID-19.
A $2.5 million small business stimulus program aimed at helping Fayette County companies hobbled by revenue losses from the coronavirus pandemic could start awarding grants by the end of this month.
The Lexington-Fayette Urban County Council voted unanimously Thursday to approve a small business stimulus package that will award up to $25,000 in grants to companies for COVID-19 expenses, including payroll, the purchase of personal protection equipment and modifications to businesses, such as plastic guards or screens, to comply with social distancing guidelines.
To qualify, the businesses or nonprofits must have a location within Fayette County and employees that work in Fayette County. Organizations must have a business license with the city and be in good standing. Small businesses are defined as having under 50 employees and under 100 employees for restaurants. Those who have received Payroll Protection Program loans through the federal government are not immediately disqualified but must disclose all financial aid they have received.
It is a reimbursement program and only businesses that can document costs will qualify.
If the company goes belly up after receiving funding, there is no requirement for the business to repay the city.
“We could lose money. There are no guarantees of success in business,” said Susan Straub, a spokeswoman for the city. “That’s why we have a screening process, so we make the best decisions possible, and that’s why we have an experienced group administering the screening process.”
Commerce Lexington, the local business chamber, will administer the program and be paid roughly 5 percent or $125,000 to do so. The program has a goal of allocating at least half of the $2.5 million to minority- and women-owned businesses.
The council finalized the details of how the program will be run during a Tuesday work session. Councilman Preston Worley initially suggested the council set aside $2.5 million for aid to small businesses during earlier deliberations about the current-year $378 million budget. It’s possible the city will be reimbursed for the $2.5 million through federal coronavirus funds.
Kevin Atkins, the city’s chief development officer, said Commerce Lexington already has a program called the access loan program that connects small disadvantaged businesses with commercial lenders. To make sure the city gets the money to businesses that are struggling now, partnering with Commerce Lexington and its existing program made the most sense, he said.
The $125,000 fee, or 5 percent of the total grant amount, is in line with administrative fees for grant management, he said.
But some council members expressed reservations about how the city would meet its goal of getting half that money to minority- and women-owned businesses. Last month, the Lexington Herald-Leader reported more than half of the city’s minority contracts went to white-owned businesses and less than 1 percent went to Black-owned businesses.
City lawyers have said the city cannot set a specific goal for those contracts based on race or ethnicity for legal reasons. The same is true for the $2.5 million small business stimulus program.
Tyrone Tyra, a vice president of Commerce Lexington who oversees the access loan program, said the grant program will largely be first-come, first-served. That’s the only way the program can get money to businesses that need it now. Tyra said the access loan program has a long track record of supporting minority-owned businesses. Roughly 28 percent of the businesses served through that program, created in 2001, are minority-owned.
Commerce Lexington leaders are confident they will meet the goal of getting at least 50 percent of the money to minority- and women-owned businesses.
“We know there are a lot of these businesses that have slipped through the cracks,” Tyra said.
Ray Daniels, a Commerce Lexington board member, said the group has already identified minority-owned businesses crippled by the economic fallout from the pandemic.
“We have no less than 100 minority-owned businesses” that will likely apply, Daniels said.
Commerce Lexington will report quarterly to the city on the status of the program, Atkins said.
Still, some council members expressed reservations during Tuesday’s meeting that targeting or marketing the program to minority-owned businesses will work.
“White-owned companies have a history of knowing how to apply for government programs,” said Councilman Mark Swanson. “I am somewhat concerned. The flyer that I saw did not mention anything about being particularly open to businesses that are owned by minorities. I think we need not only to be intentional but explicit about our desire to help businesses that have not felt that they had the same access to these kinds of resources.”
Others praised the program as a way to boost Fayette County businesses that have been left out of federal stimulus programs.
“I’m concerned that we will run out of money,” said Councilwoman Jennifer Mossotti.
Atkins said the city has also applied for a separate $3.7 million grant through the state to help small businesses. That program offers low-interest loans. The city is hoping if it is awarded that grant that those funds could be used to help other small businesses once the $2.5 million is exhausted, he said.
Councilwoman Susan Lamb said she supported the program but had concerns the council was moving too quickly. People wanted to know more about the program and have not had an opportunity to review it. It’s $2.5 million in taxpayer money, she said.
“When we are trying to rush something through, and we can’t give proper due diligence, I have a problem with it,” Lamb said.
The city’s small business stimulus program was finalized just days after the U.S. Small Business Association released data on how many Kentucky businesses got payroll protection program loans designed to keep small businesses afloat and employees off unemployment rolls during the coronavirus pandemic.
The program is a 1 percent interest loan that is forgiven by the federal government if 75 percent of the money is used for payroll and the business doesn’t fire workers or cut employee salaries.
As of June 30, $5.2 billion in loans went to 48,370 small businesses in Kentucky. But the bulk of that money went to just 6,000 businesses.
In Lexington, five businesses received loans larger than $5 million — Blue Diamond Mining, Ramaco Resources, Rhino Energy, the Roman Catholic Diocese of Lexington and S&S Firestone. There were 22 businesses in Lexington that received loans between $2 million and $5 million. Those organizations included Ball Homes, Don Jacobs Imports, McBrayer, Kentucky Eagle, Transylvania University, Paul Miller Ford and Stoll Keenon Ogden.
At least $69 million went to Lexington businesses that received loans larger than $2 million.
The information released by the small business association did not list exact amounts of the loans.
The city and Commerce Lexington is hoping to start taking applications for the small business grants July 20. Information will be posted on the city’s website soon, city officials said.
This story was originally published July 8, 2020 at 6:24 PM.
