Q&A
Details of the small business operations Fund loan program
1:31:27
·
4 min
Council Member Feliz inquires about the small business operations Fund, and Commissioner Kim provides detailed information about the loan program. The discussion covers loan amounts, terms, interest rates, and industries served by the program.
- Loan amounts range up to $250,000, with an average of $80,000 per loan
- Loan terms are 5 years for amounts under $100,000 and 6 years for amounts $100,000 and over
- The interest rate is 4%, which was below market rates at the time of launch
- The program served various industries, with food service, retail, and professional services being the most represented
Oswald Feliz
1:31:27
So a few more questions about the small business operations Fund.
1:31:30
So you gave us some details.
1:31:31
It's a public private partnership alone.
1:31:35
Could you give us a little bit more details how long the loan is for?
1:31:39
What's the maximum amount?
Kevin Kim
1:31:41
Sure.
1:31:41
It was up to $250,000, and the average was $80,000 per loan.
1:31:47
We actually anticipated early on that maybe people would be seeking about $50,000 on average, and so that's why we estimated maybe a slightly higher number getting it, but we really wanted to personalize, individualize this particular program, to make sure that we didn't just set a dollar amount and say everyone gets the same amount because not every businesses have have the same need.
1:32:09
So this booning coffee example of getting a 100,000 actually allows them to open this roastery.
1:32:14
If we gave them just 50,000, they can't really open half of roastery, so they wouldn't have been able to do anything with it.
1:32:20
It would have helped in other risk respects, but we wanted the money to go where it could have the greatest economic impact, not just for that business, but for that community and for the community industry of of business owners that are in that field.
1:32:35
I the 5 year it's a 5 year loan period.
1:32:38
I believe at a certain dollar amount at 6 years.
1:32:41
I forget which when it gets a higher dollar amount, I think it might be a 6 year amortization.
1:32:46
Otherwise, it's a 5 year Okay.
Oswald Feliz
1:32:49
Is that an interest free loan?
Kevin Kim
1:32:50
Oh, 4%.
1:32:51
4%.
1:32:52
Which is below market rates.
1:32:53
At the time when we launched it, I think interest rates were as high as 78%.
1:32:59
And this is where I really do have to give credit to our partners at Goldman Sachs And Mastercard Center for Inclusive Growth.
1:33:05
To really come in and and say, hey, we see the need.
1:33:09
We wanna be helpful.
1:33:10
And what we're trying to do now is take this model that's been so successful.
1:33:15
Other cities have been interested in it.
1:33:17
We just did a national convening of small business SBSs of the of the not the world, the United States.
1:33:22
And we had almost like 22 cities actually join, and when we talk about models like this, They were like, wow.
1:33:28
That's very innovative.
1:33:29
We wanna see how we can do it in their city.
1:33:32
What we want is the corporate America and private partners to take no more note of it.
1:33:37
Others other than just Goldman Sachs and Mastercard and say, we wanna be part of this version of 2.0.
1:33:44
So the threshold for the longer term.
1:33:46
Okay.
1:33:46
So anything a 100,000 or over is 6 years, and anything below is 5 years.
Oswald Feliz
1:33:52
Okay.
1:33:53
And what are industries that were served to this program and also help the SBS decide which businesses are awarded these funds?
Kevin Kim
1:34:00
So most represented industries, 15% food service, 15% retail, 14% professional scientific and technical services category, And while we helped design the program and partner up, we had an administrator, CRF, that did then work with the 8 CDFI's.
1:34:19
I think the real notable point here too is that, and I give so much credit to my team, and that a lot of times when you create a big program like this and there's gonna be over 1000 businesses and over, you know, tens of 1,000,000 of dollars, it's kind of easy to just say, we're going to take like the 3 or 4 biggest CDFI's and just work with them.
1:34:40
But we had an intentional mission on this opportunity phone.
1:34:44
We said, let's hit it all.
1:34:46
Let's go for it all.
1:34:47
And we wanted to make sure that we could help support capacity building in the smaller CDFI's.
1:34:53
So some of the relatively smaller CDFI's, we wanted to bring them in And those are the CDFI's that are really closely connected to historically underserved communities.
1:35:03
We wanted to make sure they were part of this program.
1:35:06
So when they came in, we were able to support them.
1:35:09
And I think now having gone through this experience, and it was like drinking water out of a fire fire hose.
1:35:14
Right?
1:35:14
In the 1st couple of weeks, we had over 10,000 people expressed interest.
1:35:21
So the processing by the CDFI's it was the CDFI's who made the decision on a case by case basis.
1:35:27
So SPS just helped design and oversee, but we didn't make any decisions directly because we really wanted to leave it up to the community based nonprofit lending institutions who know their community the best to figure out where the money should go and how much of the money should go there.