Board of Supervisors

County Approves $5M in Small Business Loans for Unincorporated Areas

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Small businesses affected by the coronavirus pandemic in San Diego County's unincorporated areas will soon have access to $5 million in small business loans.

The San Diego County Board of Supervisors unanimously approved Tuesday the $5 million recovery loan program, partnering with The San Diego Foundation. Supervisors Dianne Jacob and Jim Desmond, the authors of the proposal, said the funds will help small businesses get the resources they need during this public health crisis.

The county will direct The San Diego Foundation to manage the loans which will provide up to $50,000 for businesses with 50 or fewer employees.

Businesses will not be charged more than 2% interest for up to two years and payment terms will be capped at five years total to be consistent with state standards, the county said.

Applications from businesses that provide job retention and creation will have a higher chance of receiving funds, according to the proposal.

“We are all well aware that small businesses are really struggling right now due to COVID-19,” Desmond said. “We want to make sure we offer the resources so that businesses can get up and running shortly. I’ve heard from hundreds of business owners who are eager to get back to work and willing to follow the safety protocols. Hopefully with this loan program and their understanding we can get the economy up and running sooner!”

The county's fund will come from the General Fund balance. The county said The San Diego Foundation will return at least 95% on defaulted loans and 100% on loans that are paid off within 60 months.

An application portal has not yet been released.

The county's loan program comes after similar programs were implemented in the cities of San Diego, San Marcos, Poway and Coronado.

The $5 million fund is also the first contribution to a recently announced San Diego County COVID-19 Small Business and Nonprofit Loan Program (SBNLP), a public-private partnership formed by County Supervisor Nathan Fletcher and The San Diego Foundation.

The San Diego Foundation – through the SBNLP – and its partners will ensure the loans are backed by the state’s Small Business Loan Guarantee Program or a comparable program, the county said.

The SBNLP will further provide no-to-low interest loans for businesses financially impacted by the pandemic. The program can access available disaster recovery loans with approved 95% guarantees on the principal, Fletcher announced.

It is anticipated a variety of local governments, philanthropists and other entities will contribute to this fund, Fletcher said.

For loans over $50,000, SBNLP collaborators plan to use philanthropic and subordinate funds to leverage additional, low-cost funding available from CDFIs and other local banking institutions.

“We designed this program to allow public and private entities to donate money that our strategic partners can leverage using their technical expertise, staff capacity, balance sheets and resources to rapidly inject liquidity into the local San Diego County small business sector," Fletcher said.

The loan servicing will be managed through CDFIs Accion San Diego and LISC San Diego, The San Diego Foundation, and Mission Driven Finance.

Other finance partners include the California Southern Small Business Development Corporation, and San Diego & Imperial Small Business Development Center (SBDC).

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