WORTHINGTON — With more than $1 million in CARES (Coronavirus Aid, Relief, and Economic Security) Act monies remaining after an initial application round for the Small Business Assistance grant program, Nobles County commissioners and the Worthington Economic Development Authority each voted Wednesday to reopen the application process.
The second wave, in addition to accepting applications from small businesses, will also award grants to home-based businesses and nonprofits. Twenty home-based businesses had applied for funding during the first round, and those applications have now been approved.
Worthington City Administrator Steve Robinson said 189 applications were received during the first round of grant requests. Of those, 128 were deemed eligible for funding. The remaining 61 applications included home-based businesses, duplicates (the same individual applied for grants for more than one business, which is not allowed), and applications that were either not eligible for funding, were received after the deadline or were incomplete.
“We were projecting 375 applications based on the number of businesses,” Robinson said during Wednesday’s special meeting.
When the city and Nobles County launched the Small Business Assistance grant program in August, it had established three funding tiers based on the number of employees. Tier 1 was for businesses with up to five employees; Tier 2 for 6-24 employees and Tier 3 for 25 to 50 employees, with maximum grant amounts of $5,000, $7,500 and $10,000, respectively.
Robinson said the 128 businesses approved for funding were to share in $712,500. However, based on the remaining CARES Act funds, county and EDA leaders voted Wednesday to increase the grant amounts by 50%. This will result in the awarding of $1,068,750 during the first round of funding, with 105 Tier 1 applicants to each receive $7,500, 17 Tier 2 applicants to each receive $11,250 and six Tier 3 applicants to each receive $15,000.
The new pay scale will be used during the second wave of the application process. However, Robinson said it will be an “up to” amount, depending on the number of requests.
“We won’t know for sure, of those remaining funds, how much is going to be requested,” Robinson said. “The requests may exceed the funds available. If that’s the case, they’ll be awarded a prorated share.”
Commissioner Bob Demuth said he anticipates more applications from small businesses coming in during the second round.
“Nothing speaks louder than you getting $10,000 and your neighbor didn’t apply,” he said. “I think you’re going to see that happening.”
County commissioners and EDA members also voted to award up to $2,500 to home-based businesses who apply for grants, and commissioners approved up to $2,500 to nonprofits in the county (a city cannot give funding to nonprofits, according to League of Minnesota Cities rules).
Worthington Mayor Mike Kuhle said he thought home-based businesses and nonprofits were worthy of funding if it was available, while Chad Cummings clarified that home-based businesses should be those that file separate tax returns for their business.
Jorge Lopez, hired by the city to connect with business owners across the county who could be eligible for the grants, said he met with a lot of home-based businesses, most of whom had a certificate with the Minnesota Secretary of State’s office.
“They file individual and business taxes,” Lopez said. “They don’t have the income to be able to rent a place to do what they do.”
Robinson explained that home-based businesses were excluded during the first round because of the projections of what could be paid out to brick-and-mortar businesses. Home-based operations also have lower overhead and a lower impact to their budget related to COVID-19, he added.
For them to apply for a Small Business Assistance grant, Robinson said they will need to provide a tax ID number as well as a signed W-9.
As for nonprofits, Commissioner Justin Ahlers said he preferred not to set grant amounts, but instead wait to see how much money was left after all small businesses and home-based businesses had applied.
“I think we have to set a dollar figure,” responded Commissioner Donald Linssen, who ultimately made a motion to offer up to $2,500 to nonprofits. “We need to be able to spend the rest of the money. Through this whole thing, we didn’t want to send one dime back.”
The city of Worthington has until Nov. 15 to distribute all of its CARES Act funds, or anything left over will go to Nobles County. The county then has until Dec. 1 to get all of the funds distributed. Any money remaining would have to be sent to the state.
Applications for a Small Business Assistance grant, whether from a small business, home-based business or nonprofit, are due by 5 p.m. Oct. 16. The application can be found on both the city (ci.worthington.mn.us) and Nobles County (co.nobles.mn.us) websites.