County to participate in small business loan program

San Diego County will participate in a recovery loan program for small businesses.

A 5-0 San Diego County Board of Supervisors vote Tuesday, April 21, authorized the execution of an agreement with the San Diego Foundation in which the county will contribute $5,000,000 to the program. The agreement requires the San Diego Foundation to use the county money to fund loans to businesses in the unincorporated area which have no more than 50 employees, limits the loan amount to $50,000 per business and the interest rate to 2%, and prioritizes applications which provide job retention and job creation.

“It’s one piece of having the economy in our region recover, but I think it’s going to be a significant boost,” Supervisor Dianne Jacob said.

“These businesses may not be reopening soon,” Supervisor Jim Desmond said. “They need the dollars.”

On March 16, a county health order effective the following morning prohibited gatherings of more than 50 people, closed all bars which did not serve food and prohibited restaurant dining. On March 19, Gov. Gavin Newsom banned all gatherings of more than 10 people and trips deemed nonessential.

Jacob, whose 2nd Supervisorial District includes East County, said that the overwhelming majority of small businesses in unincorporated East County have fewer than 50 employees and most of those have fewer than 20 employees.

“The current health crisis has really decimated most of them. These are businesses with limited resources,” she said.

Mark Stuart, president and CEO of San Diego Foundation, said that the San Diego Foundation loan program focuses on local businesses while state and federal aid does not prioritize San Diego County.

“Funding may not be readily available,” he said.

“Small businesses are the backbone of our communities, the backbone of our economy,” Jacob said. “The county needs to do all it can to ease the loss in our unincorporated areas.”

The county’s contribution allows the San Diego Foundation rather than the county to administer the loan program. The San Diego Foundation will ensure that all loans are covered by the state’s Small Business Loan Guarantee Program or a similar program.

“We’ll also be safeguarding taxpayer dollars since the funds eventually come back to the county,” Jacob said.

A balance in the general fund will provide the money for the county’s contribution. The county’s chief administrative officer was directed to negotiate mutually acceptable administrative costs and fees, but not including those the San Diego Foundation will return at least 95% of the amount on defaulted loans and 100% of all loans paid back no more than 60 months after the county’s contribution is distributed.

“There are a lot of businesses in the unincorporated area who are struggling right now,” Supervisor Greg Cox said. “It will tide people over until we can get business back to normal.”

For more information, send an email to [email protected].

Joe Naiman can be reached by email at [email protected].