$15M aid program for businesses OK’d
City Council on Wednesday unanimously approved a $15 million program meant to help hundreds of Houston small businesses suffering from the COVID-19 pandemic and its resulting economic downturn.
The city has contracted with Houston Business Development Inc., a community development financial institution, to administer the funds. The contract includes $1.5 million in administrative costs, which means $13.5 million will be available for grants of up to $50,000.
There will be an application window for businesses to request grants, but Mayor Sylvester Turner
said it would take a couple weeks to get the program running.
“We know people need the money, we’ve already started getting calls,” said Marsha Murray, director of the city’s Office of Business Opportunity. “We’re working as quickly as we can.”
City officials and Houston Business Development said they hope the program will reach businesses that have not found capital or assistance elsewhere, such as the federal Paycheck Protection Program.
The money will not be disbursed on a first-come, first-served basis. Instead, applicants will be graded on a scoring matrix that accounts for factors including their number of
employees, whether the business is in an under-served community and whether it would have a legitimate chance of survival with the grant.
To be eligible, businesses must have less than $2 million in prepandemic annual gross revenue; have been operating for more than a year; demonstrate harm from governmental actions or other factors in the pandemic; and be current on all city requirements and taxes.
Unlike PPP, the city program will not include stipulations about how businesses spend the funds, but the grants will come with a training curriculum intended to teach businesses how they can retool or adjust to become more resilient. Houston Business Development will design and offer that training.
The money behind the program would come from the $404 million the city received from the Coronavirus Aid, Relief and Economic Security (CARES) Act. Those dollars have funded testing and other direct pandemic costs, but they also have been devoted to financial relief. The city also launched a $15 million rent relief program in May, which was quickly exhausted.
The small business program’s administrative costs are more than double the $600,000 Baker Ripley is being paid to administer the rent program.
Murray said she does not think the rent relief program is a good comparison. She said she believes the city negotiated a lower cost than Harris County did for its two small business grant programs — $10 million in forgivable loans, and $30 million in grants.
The administrative fee for the latter program was 11 percent, or $3.3 million. The city’s fee is equal to 10 percent.
Over 20,000 businesses applied for the county’s grants when the application window closed July 24. Businesses that get those grants can expect to receive their funds as early as Friday, said Rafael Lemaitre, communications director for Harris County Judge Lina Hidalgo.