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Home My WebLink AboutPCD 2021-06-21 Item 1C - COVID-19 - American Rescue Plan Act: Small Business SupportCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Planning & Community Development Committee CC: Mayor Ekberg FROM: Derek Speck, Economic Development Administrator DATE: June 6, 2021 SUBJECT: American Rescue Plan Act Small Business Support ISSUE This memo is provided as an overview of small business support that is funded through the American Rescue Plan Act (ARPA) as the City decides how to use the allocation of ARPA funds that it will receive. BACKGROUND The American Rescue Plan Act (ARPA) that was approved in March of 2021 is a $1.9 trillion federal COVID-19 stimulus package. It includes significant funding for small business support through a variety of federal programs. It also includes a $350 billion Coronavirus State and Local Fiscal Recovery Fund (LFRF), of which $130 billion is intended for municipalities and counties. Of the LRF, the City of Tukwila anticipates receiving approximately $4.4 million. The City can choose to use some of its LFRF funds for small business support. Federal Programs Following is a summary of the business assistance programs receiving the larger allocations of ARPA funds. Starting in 2021 the federal programs have increased emphasis on serving small and disadvantaged businesses. • The Paycheck Protection Program (PPP) is implemented by the US Small Business Administration (SBA) and provides low interest loans and grants ("forgivable loans") to businesses. In 2021 the program received an additional $284 billion of funding from ARPA. The application period closed on May 31, 2021. To date, the SBA reports the program issued over 11.8 million loans (including forgivable loans) for a total of nearly $800 billion. • The Economic Injury Disaster Loan (EIDL) is implemented by the SBA and provides low interest loans (plus some grants, called "advances") to small businesses. As of June 3, 2021 the SBA has issued over $209 billion in EIDL loans and $2 billion in grants. The application period for grants is closed but the SBA is still accepting applications for loans. • The Restaurant Revitalization Fund (RRF) is implemented by the SBA and provides grants to businesses who sell food and beverages to the general public. ARPA provided $28.6 billion for RRF. The application period closed on May 24, 2021. 15 INFORMATIONAL MEMO Page 2 • The State Small Business Credit Initiative (SSBCI) is implemented by the US Department of the Treasury to strengthen state programs that support private financing to small businesses such as revolving loan funds, venture capital funds, and loan guaranty programs. ARPA provided an additional $10 billion. Of the $10 billion, $2.5 billion is allocated for programs that support businesses controlled or owned by socially and economically disadvantaged individuals. $500 million is allocated for technical assistance to minority businesses and $500 million for very small businesses. • The Economic Adjustment Assistance program is implemented by the US Department of Commerce to prevent, prepare for, and respond to coronavirus and for necessary expenses for responding to economic injury as a result of coronavirus. ARPA provided an additional $3 billion. Most of the funds will be distributed through the US Economic Development Agency (EDA) and we anticipate those funds starting to become available this year. We do not yet know the specifics of how those funds will be used. • The Community Navigator Pilot Program is being launched by the US Small Business Administration to use culturally knowledgeable partners to connect small businesses in underserved communities to business technical assistance. ARPA provided $100 million over a two-year period. Business assistance organizations may apply to be the "hub" to create a regional program connecting local service providers to small businesses. Applications are due July 12. State Programs In addition to federal funding through ARPA, the State of Washington recently awarded $240 million to small businesses under round four of the Working Washington grant program. The State's Department of Commerce anticipates conducting a fifth round this summer with an additional $50 million. Eligible Uses of City ARPA Local Fiscal Recovery Funds for Business Support The ARPA provides that cities can use their Local Fiscal Recovery Fund allocations for a variety of purposes. In terms of small business support, the funding may be used to help small businesses address financial challenges caused by the pandemic and to make investments in COVID-19 prevention and mitigation tactics, as well as to provide technical assistance. To achieve these goals, recipients may employ this funding to execute a broad array of loan, grant, in-kind assistance, and counseling programs to enable small businesses to rebound from the downturn. The ARPA specifically identifies industry sectors that were particularly hard-hit by the COVID-19 emergency such as tourism, travel, and hospitality are eligible for support. The ARPA also allows cities to use their LFRF funds to invest in water, sewer, and broadband infrastructure. Cities can also use "lost revenue" for general government services. Depending on how those investments are made, the investments may help small businesses. DISCUSSION It is likely that many Tukwila businesses are still financially hurting from the pandemic, especially those in the tourism, travel, and hospitality sectors. If we were to survey our businesses on what they need to recover, they would probably not want loans. The government has issued a lot of loans and funds are still available and becoming more flexible. Businesses 16 INFORMATIONAL MEMO Page 3 probably would want grants. However, if we were to use our ARPA funds for small business grants, it would reduce the funds available for other programs and general government services. Some cities did not have much lost revenue so they would not be concerned by that. Tukwila did have considerable lost revenue and impacts to our general government services. Since the start of the pandemic, staff has invested considerable time trying to help small businesses understand what resources are available. Although the federal and state governments have significantly improved outreach for small and disadvantaged businesses in the past year, staff believes there still are significant gaps and an investment in a community navigator program for small businesses would be worthwhile. Although Tukwila could fund a small business community navigator program on its own, it may be more efficient to partner with other organizations. The SBA's new Community Navigator Pilot Program may help fill that need but at this time we are not aware of a local organization who plans to apply. The State's Department of Commerce plans to apply but we do not know the extent to which they will focus on South King County. Given that the SBA Community Navigator program is funded at $100 million for 50 states, it is likely only one or two organizations per state will receive funding. The pandemic has highlighted the importance of digital resources and digital literacy for businesses. To the extent the City is able to help broadband expand in our area, it is likely to help small businesses. This year we will use our grant from the Port of Seattle to do a small digital literacy program with a few small businesses. If that is successful and we see a larger need, we could use ARPA funds to expand that program. We have been in contact with staff from some of our adjacent South King County cities and they are still evaluating how to use their ARPA funds to help small business. There is some general interest in creating a revolving loan fund or grant program and agreement on the need for more community navigators. We will continue those conversations. At this time we think it will be better to see how some of the federal and state programs are formed and how they apply to Tukwila before we decide on a specific use of ARPA funds to support our small businesses. It would not be a good use of funds to duplicate services provided by someone else. However, we think it is likely that even once the other programs take effect, there will still be some gaps and it would then make sense for us to create a program or partner with other programs to ensure focus on Tukwila. Staff recommends setting aside $200,000 of the ARPA funds for possible small business support to be decided later this year. FINANCIAL IMPACT None at this time. RECOM MENDATION Discussion only 17