DENVER — Small businesses in Colorado can now apply for an emergency loan program activated to combat the economic impacts of the coronavirus outbreak.
Gov. Jared Polis announced the approval of Colorado’s application to participate in the Small Business Administration’s Economic Injury Disaster Loan program, which gives business owners the opportunity to seek low-interest loans up to $2 million. The announcement came Thursday afternoon, just hours after Colorado’s economic-development leaders met to discuss additional tools the state could implement to help affected companies.
“The economic impact of COVID-19 has been felt across our state. We are committed to protecting public health and safety and will continue fighting to ensure the pain that Colorado’s small businesses are feeling is limited,” Polis said in a statement. “This critical designation allows small businesses in all 64 Colorado counties to seek federal recovery loans that can help them through this challenging time.”
While these loans can be a crucial lifeline for some, they’re not an option for all business owners, Colorado Office of Economic Development and International Trade new business support and rural prosperity director Glenn Plagens said Thursday morning during a meeting of the Colorado Economic Development Commission. Because the program requires businesses to show a year’s worth of financial data, the disaster loan program can be out of reach for newer companies.
That’s where state organizations such as OEDIT can step in to assist.
“We want to make sure that whatever we are doing is filling the gaps in some of the other state and federal programs that are already in place,” OEDIT executive director Betsy Markey said.
The office’s Strategic Fund, which has an unencumbered balance of $5.1 million and a reserve of $9.5 million, could help fill some of those gaps.
Reserves can be tapped “for exceptional opportunities or contingencies during crisis,” ODEDIT deputy director and director of global business Jeff Kraft said.
“These are extraordinary and very highly concerning times,” he said, adding that the use of the Strategic Fund is prudent.
While economic-development officials are still crafting specific policies for how the funds could be used, grants to nonprofit lenders such as Colorado Lending Source and the Colorado Enterprise Fund are likely to be an important element of the ultimate plan.
“These grants could be used by the nonprofit lenders to pay for interest payments for businesses with existing or new loans that are in economic distress,” Kraft said. “Maybe you’re a small restaurant that’s closed. We would ask the lenders to waive your principal payments for a few months and we would pay the interest payments. This would keep the nonprofit lenders whole and solvent and would take a cash-flow burden off the businesses.”
Ultimately, the goal would be to help struggling businesses “maintain some of their employees and not have as many layoffs.”
The concept of serving as a safety net for existing businesses is a pivot for OEDIT, which typically focuses on recruiting new businesses to move to Colorado or helping current businesses expand.
“All of our incentives are primarily related to job growth,” Colorado Economic Development Commission member Wendell Pryor said. “I think we need to combine that with a mindset of a job retention strategy.”
Rather than focusing heavily on recruiting new businesses to the state, he said state economic development leaders must expand the conversation to “what it’s going to take to keep a company in business.”
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