Struggling NC small businesses turn to cities, counties for coronavirus relief

Orders at Mike D’s BBQ, an online store in Durham, have risen since March as people stuck at home look for things to cook. But owner Michael De Los Santos says he still can’t afford to pay his own salary.

Individual sales have not made up for the much larger sales he would have made if the coronavirus had not shut down the markets and festivals where he sells most of his smoky and sweet barbecue sauces and dry rubs.

De Los Santos paid his two part-time employees with part of his $2,000 loan from the federal Paycheck Protection Program, a small sum because of his low employee headcount. He still needs money to fund the barbecue storefront he plans to open in Durham in September.

“We’re able to, at this point, break even,” he said. “With the loan, I was able to free up a little bit of capital that didn’t have to go to payroll.”

Soon, De Los Santos will have another source of help.

He plans to apply for a grant from the city of Durham’s small-business relief program when applications open next week. Durham became the latest city in the Triangle to help businesses struggling during the pandemic when it approved a $3 million aid program last week.

Applications for grants and loans open June 18 and businesses can expect to receive the money by mid-July, according to the Durham Office of Economic and Workforce Development. The fund comprises $1 million each from the city, Durham County and Duke University.

The Durham City Council approved the relief fund Thursday as part of the $5 million that City Manager Tom Bonfield proposed for citywide coronavirus relief in the next fiscal year. The Durham Small Business Coalition had asked the city and county to offer $2 million each and criticized the city for being slow to provide aid.

“I want to be really specific in saying I want this money to reach small black and brown businesses who are at their end,” said council member DeDreana Freeman. “We’re so far behind. We haven’t been able to reach those businesses in a way that was impactful in this entire fiscal year.”

The city will select applicants at random instead of first-come, first-serve to give smaller, disadvantaged businesses more time to apply.

Which Durham small businesses qualify for aid?

The relief funds will be available to independently owned Durham companies in operation at least two years with fewer than 25 full-time employees and under $2 million in annual revenue.

Businesses with over $500,000 in revenue can only apply for loans, and businesses with under $500,000 in revenue can only apply for grants, according to the city.

The approved fund will include grants up to $10,000 from private funders such as Duke. Loans from public funds will be as high as $35,000 with a 3% interest rate for 10 years. Durham is not allowed to provide grants because the state prohibits cities from giving money to individuals without a public purpose defined by statute.

“I am glad there is a grant program for businesses with revenue under $500,000,” De Los Santos said. “Loans for businesses struggling in the pandemic is not the answer.”

The city will use funds separate from the relief fund to pay the Carolina Small Business Development Fund to distribute the loans and grants. CSBDF asked for a management fee of 20% of the loan fund, 10% of the grant fund and 0.5% of the loan interest payments.

City Council may add $1 million more to the fund

The City Council last week briefly debated doubling the city’s relief contribution to $2 million. Council member Charlie Reece wanted to provide more aid money, but other members wanted to wait.

Council member Jillian Johnson said she wanted to see if other parts of the community needed assistance during the pandemic before agreeing to give another $1 million to small businesses.

“I’m reluctant to commit 40% of our total COVID relief fund to small business without having evaluated any other potential needs,” Johnson said.

Council member Mark-Anthony Middleton wanted to make sure the city has enough money to buy masks and other protective equipment for the Hispanic community. Over 70% of people who have tested positive for COVID-19 in Durham County are Hispanic or Latino, even though they are only 14% of the county’s population, according to the county’s website.

“As a bleeding-heart liberal, I want to write a billion-dollar check to everybody for every cause,” Middleton said. “I am more than willing to revisit this and add another million, at least, after we get this money out the door.”

Other cities, counties already distributing small-business aid

Other cities and counties were quicker than Durham to open applications for small-business loans and grants.

Wake County in early May agreed to use $5 million of its federal coronavirus relief money to offer loans up to $50,000. The application period is still open.

Orange County approved $410,000 in grants and opened its second round of applications last week. Small businesses can apply for grants up to $5,000 by June 17.

Raleigh approved a $1 million grant fund last month. Applications closed May 21. Apex offered $1 million in loans and closed applications last month. Holly Springs agreed to match up to $15,000 in donations to the Holly Springs Chamber of Commerce to help small businesses.

Duke University’s Duke-Durham fund is offering a total of $5 million in grants to local organizations, nonprofits and small businesses. The second and third rounds of applications provide grants up to $5,000 and closes Thursday.

This story was originally published June 9, 2020 at 12:27 PM.