Hampton and Newport News have partnered to use a federal grant to set up a revolving loan program to help struggling businesses affected by the pandemic.
The City Council on Wednesday approved a $1.5 million CARES Act grant that it will share with Newport News. The award was a portion of the $13.9 million in grants to capitalize revolving loan funds for small businesses across Virginia, according to a city release from August.
The grant is “to alleviate some of the sudden and severe economic dislocation caused by the COVID-19 pandemic” and provide a permanent resource for businesses, according to council documents.
The Peninsula Industrial Finance Corporation, created in 1946, issues loans to local businesses. Its five-member board will oversee the loan program. Newport News applied regionally for the grant on behalf of Hampton, City Manager Mary Bunting said.
Businesses can use the funding as lines of credit or as term loans, Steven Lynch, Hampton’s senior business development manager said in an email. The funding can be used for purchasing equipment or inventory, used for expansions, upgrades, or a working line of credit to support short-term operating expenses.
“The program is designed to support a wide range of business types. It does not target any specific industry. Applications are reviewed and (decided) on a first come first serve basis, but the loan fund is self-replenishing,” Lynch said in an email. “As loans are (repaid), these funds are the source of funding to provide loans to additional businesses.'”
No more than 60% of the allocation can be disbursed within one city, unless the board takes action to change the distribution of the funding, Lynch said. The federal award includes $96,000 to cover administrative costs.
Last summer, Gov. Ralph Northam announced “Rebuild Virginia,” a grant program for small businesses and nonprofits to cover existing or unpaid expenses, back rent, payroll or utilities, or other financial business disruptions caused by the pandemic. Since its inception, Virginia has set aside $90 million in funding to support thousands of business that applied.
In addition, Hampton set up a loan and grant forgiveness program that is managed by the city’s Economic Development Authority. That program called for allocating $500,000 from the city’s budget for up to $10,000 grant.
“The additional funds are another way to support our local small businesses,” said Hampton Economic Director Chuck Rigney. “I’m pleased that we can work jointly with Newport News. This is a great example of regional cooperation between our two economic development departments.”
Additional information on how to apply is available at Hampton’s Economic Development Department, 757-727-6237.
Lisa Vernon Sparks, 757-247-4832, lvernonsparks@dailypress.com
