Revolving Loan Fund keeps local businesses afloat; requests come in fast, furious for zero percent loans

In less than 24 hours last week, small business owners in Brandon put in requests for a share of the $300,000 earmarked for a COVID-19 Loan Response program established by the Brandon Revolving Loan Fund board of directors.

After a formal press release surfaced April 2, Steve Tripp, president of the Revolving Loan Fund board, said $280,000 had been requested by 17 businesses. Another six loan requests await approval.

Loan guidelines made the offer especially enticing. 

Businesses can request loan amounts of $10,000 or $20,000 at zero percent interest, with payments being deferred through Dec. 31, 2020, and the loans are amortized over five years. There is no pre-payment penalty.

The allotted $300,000 was established to assist 15 to 30 businesses, depending on the amount requested. Loan funds may be used to cover rent, payroll, utilities and inventory.

“This is uncharted territory for cities, states and businesses,” Tripp said. “We have a short shelf life to respond. We have to do what we can, we don’t have an option.”

Tripp said the idea came to him in the early morning hours of March 27 when he couldn’t sleep as thoughts swirled through his mind of how the coronavirus was already crippling the local economy. While his insurance business has been tabbed as “essential” and his employees continue to work, Tripp remained concerned how the epidemic had already impacted other Brandon businesses.

“When I came to work Friday, as a local business owner that’s blessed to be in the essential piece, I knew something needed to be done,” he said. “Speed is the big thing and we have to do this for our community; there’s not an option. We know this is not the final fix because there are some great programs coming from federal and state sources, but they will take time and they will take paperwork.”

After sharing his idea with the Revolving Loan Fund board, they made some adjust ments to the loan program, and then gave it unanimous support. Tripp presented the plan to the Brandon City Council March 31. 

“Collectively, between the board, Mayor Lundberg, the city council, Bryan Read (city administrator), Christina Smith (finance officer) and Lisa Marso (city attorney), we quickly acted on this and they approved a great thing for our community between the private sector, this board and the city,” he said. “As Brandon, that’s who we are, that’s why we’re doing this, and it’s so cool that the city of Brandon and the mayor are all behind this program.”

The COVID-19 epidemic is estimated to negatively impact local sales tax this year by more than $500,000. In the early weeks of the epidemic, Tripp said local business owners are seeing a 30 to 70 percent decrease in sales.

“These are live stories in Brandon, in our backyard, on our Main Street,” Tripp said.

Tripp assures the loan program has “no red tape,” and is intended to be a quick and easy process for business owners to help ease the short-term financial burden.

“This is not an all-inclusive fix, but hopefully it will buy business owners some time until they can navigate the other state and federal programs that are rolling out,” Tripp said.

The loan application fielded eight questions: Date, business name/FEIN number or Social Security number if sole proprietor, address, phone and email; description of business; how many years in business; total employees and how many are still working; sole income of business; legal structure of business; and admission if filed for bankruptcy in the past.

No financial information is required.

From the time the application is received, funds are being issued in swift manner, Tripp said.

“Our goal is to have the first set of applications to the city prior to their April 6 meeting and checks will be cut the following day,” he said. “Normally, this is not the speed that government works, and that’s what impresses me the most. In discussions with local business owners, people’s lives are being affected now, and while there are programs at the state and federal levels that will work for these businesses, it will just take time.”

Mayor Paul Lundberg said the city council would meet in special session, if warranted, to approve multiple loan applications.

Business owners will request and submit their application via email to Tripp at SteveT@mckinneyolson.com and will sign the application with an e-signature. From there, the application is reviewed and approved by the Revolving Loan Fund board and then forwarded to Smith for final approval by the Brandon City Council. If approved, the city finance officer will issue the check to the applicant or Tripp will deliver to the intended business while following social distancing protocol.

If the funds allotted to the COVID-19 Response Loan program are depleted, Tripp said he is willing to work with the State of South Dakota, the city and the Revolving Loan Fund board to find further solutions.

“Of course, we can’t make any promises,” he said.

Alderwoman Dana Clark fully supports the loan program, but questioned if measures are being taken in case of default.

“My thought,” Tripp answered, “is we could have default. Do I think we will? I don’t. Do we do nothing and then they default and move out of town, and now we’re trying to get more (businesses) in? That’s my concern. … But my comfort with not having that is that it’s not Brandon city taxpayer funds; it’s revolving loan funds that were created in 1987.”

Lundberg said the application does allude to repayment.

“In reading the application, in my simple mind, the part where it says, ‘Must begin repayment on Jan. 1, 2021,’ is almost as good as  a simple promissory note,” he said. “The original intent of the Brandon Revolving Loan Fund was to attract new businesses, bring in employees. It is a change from that, but I think what a better change than to protect a business right now. That’s our main goal here is to keep the ones that we have going.”

The Brandon Revolving Loan Foundation was established June 15, 1987. Its purpose is to promote the interests of the City of Brandon through assisting commercial and industrial businesses through revolving loans and other economic development activities.

The Loan Foundation is governed by a board of directors, whose primary function is to receive and evaluate revolving loan applications and make loan recommendations to the Brandon City Council. Loans can be made to induce a business to locate, expand or remain in the City of Brandon.

To learn more, email SteveT@mckinneyolson.com or call 582-6988, and ask for Steve or Solveig regarding the Revolving Loan Fund.