Oceanside Approves $ 1.18 Million Business Loan Program

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OCEANSIDE – The city council approved a $ 1.18 million loan program on April 22nd to provide short-term gap funding to businesses until they receive federal funding.

The staff created the loan program after receiving instructions from the council on April 1.

San Diego County’s health officials issued a series of orders beginning March 16, ordering the closure of restaurants, bars, function rooms, and nightclubs until they were eventually extended to all non-essential businesses. Like businesses across the county, many Oceanside businesses are struggling financially.

Businesses had some avenues of help. The Federal Small Business Administration offers loans to small businesses affected by disasters such as the COVID-19 pandemic. Due to the high number of applications from all over the country, many companies are still waiting for financial support from the federal government while the SBA continues to process these applications.

On April 16, the SBA announced that the funds for the financial aid were exhausted and that new applications would no longer be accepted.

City workers have reached out to several companies to find out where they stand in the process.

So far, 22 companies have applied for the SBA COVID-19 Economic Injury Disaster Loan (EIDL) program, with only one approved but not yet funded on April 8 and two more receiving their loan advance on April 14.

There were 17 companies applying for the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act, with only one company approved as of April 16.

Due to the delay in receiving federal funding, several councilors wanted to get cash to the companies as soon as possible while they wait.

The program will provide $ 1.18 million in interest income from the General Fund, an amount that could benefit at least 59 local businesses.

The program includes loans ranging from $ 2,500 to $ 20,000. Loans between $ 2,500 and $ 5,000 have zero interest, and loans between $ 5,001 and $ 10,000 earn 1.5% interest when repaid within 180 days. Loans between $ 10,000 and $ 20,000 earn 2.5% interest if repaid within 180 days, 3% if repaid within a year, and 3.25% if repaid within two years.

The program applies to independent, consumer-focused retail and consumer services companies located in Oceanside that have been required to close or significantly change business activities due to COVID-19. The shops must be open to the general public without any age restriction. The loans are only made available to companies that have applied for SBA or EIDL funding but have not received any payouts.

Councilor Chris Rodriguez has been pushing for the small business loan program since the April 1st council meeting. Rodriguez originally asked for $ 3 million for the program and said at the April 22 meeting that he would like to see the approved $ 1.18 million as “phase one.”

City Treasurer Victor Roy and his office did not endorse the business loan program because of the “high risk” it poses to the city’s future financial condition and suggested that the council wait until its April 29 budget meeting before launching such a program is considering.

He also argued that it was “misleading” to say it was the city’s responsibility to use emergency funds for such a loan program.

“Urban emergency funding is only used for urban necessities, services and repairs,” said Roy.

Rodriguez pointed out that while the loan program may be risky, the city cannot afford to lose its businesses either.

“If these deals fail, we will save a lot more,” said Rodriguez.

The program was approved 4-1, with Councilor Esther Sanchez opposed. Like Roy, she expressed concern about how such a program could affect the city.

“My biggest concern is that we don’t even know what to cut to do this,” said Sanchez. “We don’t know when this will end and our first priority is our residents.”

Sanchez said $ 1.18 million to help just 59 businesses would be a drop in the bucket in terms of how many businesses in the city need help, but could cause delays in emergency calls, keeping parks closed and after school cut off programs and further layoffs.

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