Economic development office may divert fund to help state businesses

The Colorado Office of Economic Development and International Trade has shifted its mission from recruitment to rescue, and is considering diverting incentive funds to help small businesses stay afloat as they deal with the spread of COVID-19.

Under one proposal, COEDIT would ask nonprofit microfinance lenders like the Colorado Enterprise Fund to forego principal payments if the state is willing to cover the interest due on those loans. The money for that would come from the $14.6 million available in the state’s Strategic Fund, which is primarily used to provide cash to help recruit businesses to the state

“Our dollars are very limited. We want to fill in gaps in other programs. We are balancing the need to act quickly with the need to not waste resources in redundant ways,” Jeff Kraft, director of business funding and incentives at COEDIT, told a conference call of the Colorado Economic Development Commission on Thursday morning.

Homebase, a provider of time management software to small businesses, estimates that 26% of its Colorado clients had shut down operations as of Wednesday and that 42% fewer employees were on its system in Colorado than was the case back in January. Job losses have been swift and massive, causing a flood of unemployment benefits claims.

Credit markets have also shut off to new borrowers, including Colorado Springs’s City for Champions Regional Tourism Act project, which was trying to raise money to pay for a new visitor’s center at the U.S. Air Force Academy.

“They tried to float bonds and didn’t get any takers,” Kraft said.

The U.S Small Business Administration approved a disaster declaration request from the state on Thursday that will open up billions in federal loans to eligible small businesses impacted by the viral outbreak. But it can take up to three weeks to receive money after an application is submitted and the SBA will only extend credit where it feels the odds of repayment are good.

“The SBA won’t compromise on its criteria,” said Glenn Plagens, the state’s director of Business Development and Rural Prosperity. “They do a good job of sifting through the client to see who is going to make it and who will not.”

In other business, the Colorado Economic Development Commission approved $4.9 million in job growth incentive tax credits for a software and analytics start-up known as Project Coral. The San Francisco firm has 99 employees in Colorado and is looking at adding 465 net new jobs in Denver over the next eight years.

Those jobs are expected to pay an average wage of $107,591 a year.