Santa Clara County launches small business loan program

SAN JOSE - The Santa Clara County Board of Supervisors today voted unanimously (5-0) to partner with the State’s “California Rebuilding Fund,” hoping to provide as much as $100 million dollars in loans for Santa Clara County small businesses, and to provide an immediate six million dollars for low-interest loans for Santa Clara County businesses as a first step in a phased approach to a larger loan program. The Board directed County staff to move quickly to participate in the first package of loans issued by the California Rebuilding Fund.

The loan program was first proposed by County Supervisors Joe Simitian and Susan Ellenberg at the October 20 Board of Supervisors meeting. “I’m pleased that the Board of Supervisors have taken the next steps in support of a $100 million dollar small business loan program,” said Simitian. “These small businesses are the backbones of our communities, providing employment and economic stability for hundreds of thousands of residents across the county. They are hurting desperately right now.”

Small businesses across the County face the prospect of continued losses, layoffs, and bankruptcy, while they remain closed or in reduced operations, waiting out the pandemic which has continued to take a turn for the worse.

Simitian noted that while the County’s own budget is strained as a result of COVID expenditures and lost revenue, “A soundly structured loan program allows us to provide significant help while eventually recovering the funds. If we’re thoughtful about it we can be both bold and prudent at the same time.”

The California Rebuilding Fund is a sole member Public Benefit LLC managed by Kiva Capital Management that executes loan agreements from financial institutions and other lenders, as well as accepts donations for the Fund. The local Community Development Financial Institutions (CDFI) will then lend to small businesses.

“COVID-19 has been an economic body blow for our County’s small businesses and their employees,” said Simitian. “Using the State’s California Rebuilding Fund’s infrastructure, and working with local CDFIs that understand our community’s needs, prevents duplicative efforts and streamlines the process to get help to local businesses and their employees as quickly as possible.”

This initial allocation of six million dollars is “just a first step,” said Simitian. County administration will be reporting back to the Board in February with options for additional allocation and support efforts. “By recycling and relending funds as they are repaid to the County, we hope to leverage the funding we invest to lend greater amounts over time while minimizing the need for County dollars.” Simitian said he thought, “Partnering with the California Rebuilding Fund is the smart way to proceed. It reduces the risk for the County, ensures that qualified financial institutions are underwriting the loans and collecting payments, and returns our investment to the County.”

The loans are expected to:

• Have a 3-5 year term;
• Range from $5,000 to $100,000;
• Have a 4.25% interest rate; and,
• Be available for qualifying small businesses with 50 or fewer full-time employees.

At Tuesday’s Board meeting, Simitian noted, “Nine months into the pandemic we cannot deny the impact on working men and women who rely on their paychecks to pay the rent, buy the groceries, and put gas in the car. These are people of modest means. They need and deserve our help. When our County’s small businesses close their doors, those paychecks are gone. Their livelihoods are gone. Unless we step up.”

“If we take action today, we can: retain jobs, sustain businesses, and secure our tax base. And if we do all that, we can avoid adding to the number of folks who are obliged to rely on our County programs and services, which of course alleviates the potential for an even greater burden on our County budget,” Simitian said.