City-VyStar Small Business Loan Program: A Potential Safety Net For Businesses Lacking Cash | Jax’s Daily Log | Jacksonville Daily Log


The weekend before Jacksonville Mayor Lenny Curry’s March 13 state of emergency due to COVID-19, administration officials knew the order would lead to decisions that could flatten the curve but hurt the local economy.

“Based on the first shocks that we knew were coming and that had begun, it was clear that, in particular, people in the small business services industry were going to suffer at least the first substantial wave of economic shock,” said the director. City clerk Brian Hughes during a telephone interview on April 8.

Behind the scenes, Curry staff began looking for local stimulus options, though Hughes said they were looking forward to small federal businesses and individual assistance.

Before city officials began negotiating with VyStar Credit Union about a small business coronavirus relief loan program, Hughes said officials ruled out direct payments to Duval County workers and businesses.

Unlike the federal government, Hughes said the city did not have the infrastructure to get people cash quickly.

VyStar had already instituted a relief loan program before the city’s chief financial officer, Patrick “Joey” Grieve, and the credit union’s chief loan officer, Jenny Vipperman, began working in the public-private partnership.

“We looked for anything we could do to keep businesses afloat and potentially incentivize loans to keep people on the payroll until we have a better idea of ​​how long this is going to last,” Hughes said.

Hughes said it took a week to get the program ready for implementation.

“In that week, we told the mayor that we were going to come up with something,” Hughes said. “(Curry) started speaking at his press events trying to speed up some kind of assistance for individuals or small businesses at least.”

A $ 50 million loan pool

VyStar has made a $ 50 million loan pool available to small businesses in the Credit Union’s COVID-19 Small Business Assistance Loan Program.

Brian hughes

Businesses can borrow up to $ 100,000 at an interest rate of 5.99%. The loan acts as a line of credit and businesses will receive an immediate grant of $ 1,000 from the city, if the loan is approved.

Curry signed Ordinance 2020-0201 on April 7, allocating $ 9 million from the city’s general fund for the first year of the COVID-19 Small Business Assistance Employee Retention Subsidy Program.

City officials will budget for a six-year grant program of $ 26 million.

Hughes said the amount was what VyStar and the city felt comfortable investing in a higher risk group.

VyStar CEO Brian Wolfburg told the Daily Record on April 1 that the city’s backing gave VyStar the financial security to allow more lenient underwriting criteria for loans, allowing for higher risk to help more Business.

Hughes said that while the deal doesn’t have the robust recall provisions in a typical incentive deal with the city’s Office of Economic Development, it is worth the risk.

“I assure you that no entity expects us to get no returns and recover as much value as we can,” Hughes said. “But given the circumstances, I think both entities have done the risk analysis that this is the amount of cash that we are willing to put in a much higher risk environment. Because the potential impact and payoff are also very high. ”

The city weighed the risk of losses against continued drops in sales tax, bed tax, and other revenue in the future. Hughes said the city has instituted a temporary hiring freeze and changed compensation for non-union employees to lower costs.

Based on those changes, Hughes said the city should be able to avoid job cuts and other cuts for the remainder of the 2019-20 fiscal year.

He said the small business assistance program is beneficial to city coffers because it will help small businesses keep employees on payroll for the next six months to a year and make economic recovery faster. It could also potentially reduce the need for Duval County residents to apply for unemployment benefits.

“If half of the companies that get these bridge loans were to stay afloat, the long-term economic impact of that company and that all those employees could bear it would be enormous,” Hughes said. “But the risk in that small pool of cash is just as high and problematic.”

It is not a “one-size-fits-all” plan

Hughes said the city doesn’t see the stimulus as a “one-time” effort.

He said the city has enough in its reserve fund to consider a moratorium or reduction on some city fees.

According to the City Council Auditor’s Office, the city had $ 146.4 million in its reserve fund that could be made available with the approval of the Council.

Hughes did not provide details on what fees could be waived.

Commercial companies that rent city-owned spaces could also see some relief in charges, Hughes said.

“We’re looking at things across the government,” Hughes said. “There are a variety of ways we have at our disposal to try to incentivize struggling companies and find ways to keep the economy going that, in the long run, will provide taxpayer benefits if we help mitigate.”

Ratings, Guidelines, and Steps for a VyStar Loan

Loan Program Qualifications:

To qualify, businesses must report their employment levels as of February 29. A business must be in Duval County and have:

• One year of operation completed.

• Completed at least one tax return.

• Have between two and 100 employees.

Loan Program Guidelines:

• Businesses can borrow up to $ 100,000 at an interest rate of 5.99%. The loan acts as a line of credit and businesses will receive an immediate grant of $ 1,000 from the city, if the loan is approved.

• VyStar will waive the $ 250 loan underwriting fee for loans less than $ 5,000. The city will pay the fee for loans over $ 5,000.

• The city will cover 100% of the loan interest payments during the first year. No principal payments will be due during that time.

• In years two through six, the city will provide grants to cover interest costs, if businesses retain at least 50% of their precoronavirus workforce. Business owners could get up to 50% capital repayment (10% annually) after the first year. This is in the form of a grant from the city.

The application process

• To go VyStarcu.org/coronavirus and click on “More on Business Help.”

• Download and complete the loan application.

• Email the completed application with all signed business owners as guarantors and the following financial documentation to [email protected]:

• 2019 tax returns, if filed.

• In lieu of the 2019 returns, file the 2018 tax return and the 2019 income statement and year-end balance sheet.

• If no tax returns have been filed, provide the 2019 year-end profit and loss statement and balance sheet.

• The most recent personal tax return filed by all business owners.

Loan processing

• A VyStar representative will acknowledge receipt of the completed application and begin processing the application.

• Applicant will receive VyStar’s decision within three business days.

• If the application is approved, VyStar will email the closing documents via DocuSign within one business day of approval.

Get the money

After the loan documents are signed, the loan will be recorded and the first advance will be available in the applicant’s VyStar business deposit account.

• Funds will be available within one business day from the date the loan documents are completed.

• Additional advances can be requested through the Contact Center or a VyStar branch.

• Advances will be deposited only in the company’s deposit account.

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