As a follow up to our webinar last week on what the CARES Act means for municipalities, we’ve been asked a handful of questions consistently. We thought it would make sense to publish our answers for a wider audience.
Frequently Asked Questions
1. How do I recoup lost sales tax revenue due to Covid-19 related closures, cancelled events, and lack of tourism?
Unfortunately, there is not a direct provision in the CARES Act that reimburses municipalities or stimulates the economy to recoup this revenue. However, the following provisions exist that other entities in your community may be eligible for that would indirectly provide support and enhancement:
Department of Commerce
- Economic Development Administration (EDA) – The bill provides $1.5 billion for economic adjustment assistance, which can be used to help rebuild impacted industries such as tourism or manufacturing supply chains, capitalize local funds to provide low-interest loans to businesses of all sizes, and support other locally-identified priorities for economic recovery.
- Support for Manufacturing – $50 million is provided for the Manufacturing Extension Partnership to help small- and medium-sized manufacturers recover.
Department of Housing & Urban Development (HUD)
- Community Development Block Grant (CDBG) is a flexible program that provides communities and states with $5 billion in funding to provide a wide range of resources to address COVID-19, such as services for senior citizens, the homeless, and public health services.
Department of Agriculture
- $9.5 billion total allocation with partial funding allocated specifically for specialty crops, producers who supply local food systems and farmers markets, restaurants and schools, livestock producers, (e.g. cattlemen and women, and dairy farmers).
2. How do I support small businesses in my community?
Today, you can support small businesses by connecting them with local banks that are certified lenders of the Paycheck Protection Program grants and loans through the Small Business Association and the CARES Act. Time is of the essence, and these resources can help your small businesses survive through the next 8 weeks. Tomorrow, your small businesses will need a resurgence of consumers and activity in your Downtown or town center.
Events, festivals, retail promotion events, farmers markets and art programs will reintroduce your residents back to these key areas of your community. Developing your roadmap now will pay dividends when the crisis is over.
3. I’m hearing that my small businesses are having trouble accessing the Paycheck Protection Program funds from our local lenders. What should I tell them?
Businesses can apply for PPP funding through any existing Small Business Association (SBA) 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. SBA offers a handy tool where small businesses can find eligible lenders near their geographic location.
However, most lenders are prioritizing current clients. Wells Fargo also recently announced that they are no longer taking applications for the PPP, which is a big blow to many of their customers.
If a small business can’t get traction with their existing banker, encourage them to try reaching out to credit unions or more community-based banks that may be more incentivized to participate in this program.
4. What do I do if a business closes?
First, you need to expect businesses to close. Retailers and restaurants run on a very thin margin and disruptions such as this will cause many to close. Following this crisis, the businesses and entrepreneurs who weathered the storm will have the ingredients for expansion: lower real estate values, lower cost of capital, and lower construction prices.
Second, when a business closes ideally you already understand the type of property that is now available, the prospective tenants who can occupy the space, and have inroads with expanding businesses that want to be in your market. If you have this knowledge base and relationships – leverage them.
If you do not have that information, the best thing you can do to reach out to the property owner or broker to identify how the City can assist.
The Bottom Line
We understand that in times like these there are more questions than answers. Our team is still working hard and welcome to opportunity to provide answers to your questions. At the end of this crisis we know that communities’ strategic priorities will include:
- Creating jobs
- Bolstering sales tax revenues
- Ramping up quality of life and sense of place
- Enhancing and supporting small business efforts
Our services have always aligned with those initiatives and our mission to increase the quality of life within communities across the United States is constant. It is our privilege to provide these free resources during this crisis and hope we have the ability to work hand in hand with you when the timing is right.