Simitian, Ellenberg propose $100 million loan program for local small businesses

SAN JOSE – Santa Clara County Supervisors Joe Simitian and Susan Ellenberg are proposing a COVID-19 small business loan program of up to $100 million. If the proposed is approved at the October 20 Board of Supervisors meeting, County Administration will report to the Board at the November 18 and 20, 2020 budget hearings with options for establishing a program that would provide low-interest loans to small businesses adversely impacted by COVID-19.

“COVID-19 has been an economic body blow for our County’s small businesses and their employees,” said Simitian. “These businesses are the backbones of our communities, providing employment and economic stability for residents across the county.”

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.

“Throughout this health crisis, we have all made great sacrifices for the health and safety of our communities,” said Ellenberg. “Our small, local businesses are no exception. And as we look to ways to mitigate the impact of this crisis for all those affected, it is our responsibility to include supports that can offset some of these negative impacts on our small businesses to assure that their families and the families who look to them for work, can survive.”

Simitian noted, “While support for these businesses can and should be provided by the state and federal government, sufficient support has not been forthcoming. The state lacks resources, and timely action from the federal government seems unlikely. While some programs exist, they are time-limited and inadequate to meet the demand.”

“Many businesses find that their options have been exhausted, and are desperately trying to hold on,” said Simitian. “While the County doesn’t have significant experience in administering this type of program, by partnering with local financial institutions and nonprofits, we can find something that works to help those that are hurting.”

County staff will report to the Board of Supervisors at the November 18 and 20, 2020 budget hearings with options for establishment of the loan program. Among the issues to be addressed in a report back are:

• Total target for the loan fund;
• Source of funds;
• Initial thoughts as to eligibility criteria;
• The potential range of loan amounts;
• How and by whom the loans will be underwritten and serviced; and,
• Issues, if any, with legal prohibitions on "gift of public funds" and/or constitutional prohibitions on public banking.

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 bulk of the funds.”