Small business loan program provides COVID relief: Supervisors push for program expansion

SAN JOSE – Santa Clara County’s initial investment in the State’s California Rebuilding Fund has already provided 56 small businesses to date with low-interest loans to help them weather the pandemic. Local businesses within the County have already been approved for over $3.8 million of the first $6 million in funding authorized by the County. The initial investment of $6 million was proposed by County Supervisors Joe Simitian and Susan Ellenberg and approved by the County’s Board of Supervisors in January.

Simitian said he will be pushing for an additional investment of $19 million to the fund in the County’s budget for the next fiscal year. The Board of Supervisors will hold budget workshops this week, on May 10^th, 11^th, and 12^th, and vote on the final budget at a regular meeting on June 22^nd.

“Small businesses are the backbone of our communities, providing employment and economic stability for hundreds of thousands of residents across the County,” said Simitian, who pushed for the allocation. “I’m really pleased to see this money moving quickly to the residents who need it.”

Simitian noted that continued funding is essential to meet ongoing need within the community. With more than 450 additional loan applications already in process in the County, “the demand for this kind of support continues to be extremely high.”

“We know that building back from the pandemic will take a long time,” said Luz Urrutia, CEO of the San Jose-based Accion Opportunity Fund, one of the approved lenders for the program. “But small businesses have always been a driving force behind economic recovery. That’s why it’s imperative to build a pathway for their survival, especially those left behind by federal relief efforts.”

The loans made within the County so far have especially benefitted very small enterprises, with 73% of businesses funded employing five people or fewer, and nearly 90% employing 10 or fewer. In this respect, the County fares even better than the State: only 63% of loans statewide have gone to businesses with fewer than 5 employees.

The loans:

• Range up to $100,000;
• Have a 4.25% interest rate and a 3-or 5-year term option; and,
• Are available for qualifying small businesses with 50 or fewer full-time employees that had revenues under $2.5 million in 2019 and meet the program’s standard underwriting guidelines (which includes at least a significant reduction in revenues since January 2020).

Loans have also flowed to a diverse set of recipients within the County:

• 62.5% of businesses funded self-identified as women-, indigenous-, POC-, or veteran-owned; and
• 55% were in Low- or Moderate-Income (LMI) census tracts.

With an average loan amount of $68,262, local recipients include:

• A day care facility;
• Restaurants;
• Flower shops;
• A bookstore;
• An auto repair shop;
• A trucking company;
• An eye doctor;
• A dentist; and
• A learning center.

"In the restaurant business, it's very hard to get a loan from your bank,” said Dino Tekdemir, who received a California Rebuilding Fund loan for his Palo Alto restaurant, Anatolian Kitchen, which serves Turkish and Kurdish cuisine. “With the California Rebuilding Fund loan, we were able to pay our rent and secure better ventilation to keep everyone safe during COVID. We've been open for ten years and know most of our customers by name. Throughout COVID, they've supported us by coming by for take-out and, for the past few months, outdoor dining."

Feliciano Zavala, who owns Peninsula Party Rentals in Palo Alto, used his California Rebuilding Fund loan to re-hire an employee, pay rent, and catch up on bills. 

"Since most of our business was from festivals, COVID hit us tremendously hard,” Zavala said. “For us, this loan was the difference between staying open or closing our doors forever. Now, we're booking clients for late fall, and starting to see the light at the end of the tunnel. If our business can survive this, we can survive anything."

The County was able to create a pipeline for loan opportunities to these small businesses by partnering with the California Rebuilding Fund. The California Rebuilding Fund is a public-private partnership that drives capital from private, philanthropic and public sector resources to Community Development Financial Institutions (CDFIs) like San Jose’s Accion Opportunity Fund, which then lend the funds to small businesses. In addition to the County’s contribution and other resources, the fund includes a $25 million anchor commitment and $50 million guarantee allocation from the California Infrastructure and Economic Development Bank (IBank).

Simitian said he was drawn to a partnership with the California Rebuilding Fund because repayment is largely guaranteed (at least 95% will be returned regardless of loan performance), and because a loan program allows the repaid funds to be, “loaned again and again, multiplying the impact of the County’s participation over time.”

“The California Rebuilding Fund is giving our smallest businesses the resources to rebuild better,” said Urrutia. “Because of the additional support from the Santa Clara County Board of Supervisors, local businesses have access to the capital they need to get back on their feet. When we invest in California’s small businesses, we can continue to enjoy the wealth, jobs and character they bring to our communities.”

Interested business owners can learn more about the program or begin the application process for a loan at: caloanfund.org.