With the clock ticking on the deadline for local government to spend the federal dollars funneled through the Coronavirus, Aid, Relief, and Economic Security Act, the Owatonna City Council designated $500,000 to aid small businesses that have been negatively impacted by the ongoing pandemic.
Community Development Director Troy Klecker explained to the council during its regular meeting Tuesday that the Economic Development Authority is contracting with Ehlers, Inc., a financial advisory company, to administer a business assistance grant program with the CARES Act dollars.
“The EDA has approved a program that would provide up to $10,000 in the form of a grant to businesses with 50 employees or less that incurred unreimbursed costs due to COVID-19,” Klecker said, adding that the application is currently being developed and will be active from Aug. 31 to Sept. 18. “All funds for the program must be spent by Nov. 15.”
Klecker said the $500,000 put toward the program will not compromise any reimbursable city expenses that have been incurred due to COVID-19. The city was awarded $1.9 million from the CARES Act.
In order to be eligible for the Owatonna CARES business grant program, businesses must be private, for profit businesses with a physical establishment in the city. The businesses must be in good standing with the Minnesota Department of Revenue and Secretary of State, the county, and the city as of March 1 and have the ability to demonstrate they were adversely affected by an executive order related to the pandemic or experienced a significant financial hardship as a direct result of COVID-19. Eligible businesses must also have been in operation since Nov. 1, 2019.
Businesses that received federal relief funds such as the Small Business Administration, Economic Injury Disaster Loan, or Paycheck Protection Program are still eligible for the Owatonna program, but if awarded grant funds, they must use the city funds for other eligible expenses.
Funds cannot be used to replace lost revenues or pay taxes under the federal guidelines. Funds may be used to cover operating expenses including payroll, rent/lease payments, mortgage payments, utilities, payments to suppliers or other critical business expenses including business consulting to modify business operations.
Businesses that are ineligible for the Owatonna program include businesses that derive income from passive investments without operational ties to operating business, businesses that primarily focus on speculative activities based on fluctuations in price rather than the normal course of trade, businesses that derive more than half of their income from gambling, businesses that derive any income from adult oriented entertainment, home-based businesses or those without a physical establishment, nonprofits and those that have received state CARES small business funding.
The Steele County Board of Commissioners voted to designate $671,872 for business relief throughout the county, dividing the amount between Owatonna, Medford, Blooming Prairie, and Ellendale to implement into their own business relief programs. The amount allocated for Owatonna will bring the city’s business grant program up to roughly $1 million.