WORTHINGTON — Members of the Worthington City Council and Nobles County Board of Commissioners reached a consensus during a joint meeting Thursday to move forward with plans to establish a Small Business Assistance grant program to distribute a large share of its federal CARES (Coronavirus Aid, Relief and Economic Security) Act money.
Thursday’s noon meeting at the Worthington Event Center included representation from several of the townships and small cities in the county. While each entity is eligible to receive a designated amount of funds, they have the opportunity to collaborate with Nobles County and the city of Worthington to get the money into the hands of small businesses most affected by the global pandemic.
In addition to city and county leaders giving verbal agreement to the grant program was the consensus that it be fair and equitable — meaning a business in Worthington should get no more money than a like business in Brewster or a like business in Ellsworth.
Worthington Assistant City Administrator/Director of Economic Development Jason Brisson modeled the yet-to-be-approved grant program after one created by the state’s Department of Employment and Economic Development (DEED), using available information on local businesses.
The local program outlines three distinct tiers of small businesses: Tier 1 is defined as zero to five full-time equivalent (FTE) employees, which are eligible for up to $5,000 in grant funding; Tier 2 includes businesses with six to 24 FTE employees and eligible for up to $7,500; and Tier 3 is for businesses with 25 to 50 FTE employees, eligible for up to $10,000.
“We want it to be equitable so all money goes to businesses that are eligible,” said Worthington City Administrator Steve Robinson. “It’s not first-come, first-served.”
The city of Worthington has designated $700,000 of its $1,017,847 in CARES Act dollars to the relief program for small businesses. While Nobles County has yet to decide how it will allocate its $2.7 million, initial discussions earlier this month focused on matching dollar-for-dollar the city contributions to help businesses across the county.
Just in the city of Worthington, Brisson said they could receive between 325 and 350 applications from small businesses.
“The program would be specifically for for-profit businesses,” Brisson said. “Nonprofit and home-based businesses would not be eligible.”
That led to some questions about what is considered a home-based business. A person’s repair shop, for instance, may be located at the same address as the home, but still be a business that may have been impacted by COVID-19 through temporary closure and/or lost revenue.
Brisson said there is a gray area about whether home-based businesses qualify because DEED excluded both home-based and nonprofits from its template. Clarification has been sought, but none has been given, Robinson added.
City Councilmen Alan Oberloh and Chad Cummings viewed ineligible home-based businesses as, for example, independent sales consultants for Tupperware, Scentsy or Pampered Chef, while agreeing that businesses who file a separate tax return, even though the address is the same as the residence, should qualify.
“If we decide to fund those businesses and they’re not eligible, the city or the township or the county will have to repay those funds,” Brisson cautioned.
In response to a question about whether in-home daycare operators qualify for the small business grants, Brisson said they are eligible, but the state is working on a separate program and pot of money for them.
The program developed locally is “heavily weighted” toward smaller businesses, Brisson said. In the proposed application, business owners must demonstrate at least a 10% revenue loss between March and May 2020, compared to the same time period in 2019.
“The funds would only be eligible for operating expenses, not for capital expenses,” he said.
While he’d hoped the application process could begin Aug. 1 and continue through the month, Brisson said he’s still waiting for some answers. One thing he noted Thursday is that according to state statute, cities just can’t issue funds directly to businesses. It’s uncertain if it can be done based on the circumstances, but if not, Brisson said the CARES Act dollars would likely be funneled through the city’s economic development program for disbursement.
Robinson said the plan is to distribute the funds once the application window closes and a review process has been completed.
“Then, if we end up having more money available based on the award amounts, we can go back to policymakers and ask to up those dollar figures,” he said.
Robinson said he wanted to make the application as simple as possible, which would therefore take less time for them to be reviewed. Pertinent information needed from each business applicant is what tier they are in and how much money they are seeking from the maximum amount available to them.
“They’ll sign an affidavit saying the information is accurate to the best of their knowledge; and there will be random audits,” Robinson said.
Commissioner Matt Widboom was most concerned about the timeliness of the grant distribution.
“We certainly don’t want to wait. We have businesses out there that are really hurting right now,” Brisson said. “We want to make sure we’re doing it right, but fast enough to be helpful.”
Nobles County Administrator Tom Johnson said not all townships and cities are aware yet that they must certify with the state in order to get their CARES Act funds. He, along with Robinson, urged all of the groups to apply for their money.
“Even if you don’t have a use for it, you can allocate it to … the county,” Robinson said. Those funds could then be added to the small business assistance program.
Any funds unclaimed by townships or cities stay with the state.