Kern County hopes to throw a lifeline to local small businesses with its own $25 million coronavirus relief fund made possible by the federal CARES Act.
On Tuesday, the Board of Supervisors is scheduled to authorize the County Administrative Office to enter into agreements with local lenders and small businesses that could see the program start as early as May 26.
In a letter to supervisors included in the meeting’s agenda, the CAO said local restaurants would get the first chance at the money and priority would be given to nonessential businesses identified in Gov. Gavin Newsom’s stay-at-home order that have been severely impacted by COVID-19, like salons, gyms, hotels and other tourism companies.
The county’s program seems to resemble the U.S. Small Business Administration's Paycheck Protection Program that helps businesses maintain their workforce during the coronavirus pandemic. However, the county appears to be focusing on businesses that have experienced difficulty securing the federal loans.
When the federal government disbursed $350 billion during the first two weeks of April as part of its relief package to businesses, the perception was many large companies had sucked up a disproportionate amount of the funds. Local businesses complained of difficulty securing the forgivable loans before the program ran out of money.
Kern County’s local relief program — which is funded by a $157 million CARES Act allocation — will only be available to businesses with 50 or fewer employees that earned $5 million or less in revenue during 2019. The County Administrative Office said in the letter that efforts also would be made to market the program specifically to rural communities.
However, money still remains from the second round of CARES Act financing, raising questions about how the two revenue relief sources will coexist. On April 24, President Donald Trump authorized an additional $310 billion for the federal loan program, and local banks report the funds have not yet dried up.
Nick Ortiz, president and CEO of the Greater Bakersfield Chamber of Commerce, said the county’s loan program would augment and complement the federal paycheck protection loans.
“(It will) try to find those sectors that had issues participating in the first two rounds, and are on the outside of the governor’s stages for reopening, so that we can try to get them through the summer and potentially the beginning of fall,” he said.
Millions of dollars have already been distributed to local businesses through banks.
Mission Bank President and CEO A.J. Antongiovanni said the institution had approved about 700 loans worth $122 million across its network of branches, which span five counties.
“We did two or three years worth of loans in 10 days,” he said. “They were all local businesses. We don’t have businesses applying from other areas. It’s just all people in our markets.”
Valley Strong Credit Union, Kern’s largest financial institution, handled just over $14 million in loans after more than 200 local businesses reached out, said Senior Vice President Michael George.
“It’s been a great experience,” George said. “It’s kind of been an introduction to the community for a lot of businesses.”
Both bank executives described an initial rush to secure the loans followed by a slower, but steady, stream of applications.
“There are still borrowers reaching out to us for various reasons, but it’s a much slower pace,” Antongiovanni said. “We went from doing 150 a day to doing three a day.”
The small business loans are meant to cover two months of payroll, potentially creating a problem if the stay-at-home order hasn't been lifted and the government has not issued a third round of funding.
For some businesses, reopening is far preferable over relying on government funds.
“It’s just a hard pill to swallow when we are able to work, but we can’t because of the governor,” said Natalie Mears, the owner of Ethel’s Old Corral, which is currently only allowing carryout.
She said she received her business’s PPP loan around two weeks ago after about a monthlong application process. She expressed frustration at the governor’s ever-changing order along with the confusing terms of the loan. For Mears, the real relief will come when she is allowed to serve diners in her restaurant.
“(The loans) are very helpful and appreciated, but we need to go back to work,” she said. “Open up our county.”