Lexington moves forward with $2.5 million more for popular small business stimulus
The Lexington council took its first vote Tuesday to give an additional $2.5 million to local small businesses after the first $2.5 million for the program was exhausted in two weeks.
The Lexington-Fayette Urban County Council voted unanimously Tuesday to move forward with an additional $2.5 million for a loan program for small businesses. The council will take a final vote on the resolution at its July 8 council meeting.
If it passes as expected, information on how to apply for the second round will be announced after July 8.
The first allocation of $2.2 million went to 155 Fayette County businesses.
Of those 155 small businesses, 57 percent were either women- or minority-owned companies, according to information provided to an urban county council committee meeting Tuesday.
Commerce Lexington manages the program.
Larry Forester, a Forcht Bank banker and member of the Commerce Lexington team that oversees the program, said the program used all available funds in two weeks. The council set aside $2.5 million for the first round in May. Roughly $300,000 went to Commerce Lexington to administer the program. At the time, the council agreed to set aside an additional $2.5 million if there was demonstrated need.
“We wanted to make sure we touched as many people as we could and touched as many people as possible,” Forester said. “We wanted to make sure that people could get funding quickly.”
The program allows eligible small businesses to apply for up to $25,000 based on sustaining or increasing employment or total payroll within one year. If those businesses can maintain those employment or payroll goals, the loan will not have to be repaid.
If businesses fail to meet those employment targets, the loans will have to be repaid.
For example, if a business received a $25,000 loan to retain 10 employees but only retained eight after a year, the company would have to repay 20 percent of the loan or $5,000 plus 2 percent interest.
The goal is for 50 percent of all funds to go to women- and minority-owned businesses or businesses in poorer neighborhoods.
The program started in mid-May and is the second round of loans and grants awarded to Fayette County small businesses since the coronavirus pandemic began.
“We received funding requests of $7.1 million,” said Forester of the most recent round. “I get calls every day asking about it.”
In total, the city has already given more than $5 million to help prop up small businesses. A 2020 program awarded $2.3 million to small businesses. That program provided direct grants to businesses to help with coronavirus-related costs, and the grants do not have to be repaid.
There were some businesses and nonprofits that received funding in 2020 and 2021, he said.
Given the need, many council members said Tuesday they would prefer getting a second round of money to businesses. The money is currently from a city savings account. However, the program could be funded through federal coronavirus stimulus relief dollars.
“I would rather go ahead and give it if you have people who need it,” said Councilman Richard Moloney. “I’m on board right now.”
Although the program has been successful, there have been some hiccups.
Some business owners have complained they have not been able to get questions answered about the application process, said Councilwoman Jennifer Reynolds.
Commerce Lexington officials said Tuesday they were working to add more staff through its $375,000 administrative fee. Commerce Lexington will not get a second administrative fee for administrating the second round of dollars. According to the agreement, that administrative fee is capped.
There will be an update on the 168 businesses and nonprofits that received grants in 2020 during an August committee meeting.
This story was originally published June 29, 2021 at 3:59 PM.
