City of San Marcos COVID-19 Business Sustainability Program

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The City of San Marcos recognizes the significant negative impacts that the COVID-19 emergency situation will cause to our local business community, particularly our small and independent local businesses. San Marcos has always tried to approach how it governs in an entrepreneurial and business friendly way and through decades of sound fiscal management, has developed and maintained reserves that it can use to get through emergency and economically stressful times.

The COVID-19 emergency will undoubtedly have negative budgetary impacts on the City itself and we will need to find ways to address them. At the same time, we fully recognize the need we have to have a diverse and fiscally sound business community, so, even in difficult times for the City, we feel the right thing to do for our businesses and citizens is invest in our businesses so that as many of them as possible can exit this emergency in as close a fiscal condition as when it started.
To that end, the City Council of the City of San Marcos approved the City of San Marcos COVID-19 Business Sustainability Program on March 24, 2020.  The program will set aside up to $3,000,000 of the City’s General Fund Reserves for a short term business loan program. The parameters of the program are described below.

Program Size   

  • Not to exceed $3,000,000

Loan Limitations

  • Loans up to $10,000 with 0% interest repaid within 180 days
  • Loans from $10,001 to $25,000, 1.5% interest if repaid within 180 days, 2.5% if repaid within a year
  • Loans from $25,001 to $50,000, 2.5% interest if repaid within 180 days, 3.0% if repaid within 1 year, 3.25% if repaid within 2 years, 3.375% if repaid within 3 years, and 3.5% if repaid in 4 years. Priority will be given to businesses with 10 or more employees for loans between $25,000 to $50,000.
The City hopes to fund loans within one week of receiving a completed loan application. Loan repayment will commence within 120 days after the City’s affirmative declaration that the local emergency is no longer in effect. Interest accrual will commence on that date as well. City Manager is authorized to negotiate the structure of the repayment plan on a case by case basis. Applicants may inquire into alternative loan payment terms. 

Other Government Assistance

Should a loan recipient apply and receive other government assistance, their application should include the outstanding balance of their City loan so that the City can be repaid upon receipt of additional financial assistance.

Loan Security

Loan recipients for amounts less than $25,000 will be required to execute a promissory note in a form satisfactory to the City in order for the loan funds to proceed. Loan recipients for amount ranging from $25,001 to $50,000 will be required to execute a loan agreement wherein they acknowledge that the City will have recourse to the Borrower’s personal assets to satisfy any outstanding balances in the event of a default. The City reserves the right to require a personal guarantee on loans less than $25,000 should it feel that is the best way to ensure that a smaller loan is repaid. 

Use of Funds Declaration

Loan recipients will be required to affirmatively declare that any loan funds received from the City will be used to the benefit of the business physically located in San Marcos (some San Marcos based businesses have satellite locations in other jurisdictions).

Tiers of Businesses to be Considered

Tier 1 – Independently owned businesses located in San Marcos that have been mandated by government action or decree to close or significantly alter their business activity due to COVID – 19.
Tier 2 – Independently owned businesses located in San Marcos that can demonstrate that their businesses have been significantly affected by government action or decree but have not been ordered to alter business practices other than requirements related to size of groups in a single area and observing recommended social distancing.
Tier 3 – Businesses that are located in San Marcos, are part of a national and/or regional franchise and have been mandated by government action or decree to close or significantly alter their business activity due to COVID-19.
In reviewing applications the City will prioritize Tier 1, then Tier 2 and lastly Tier 3.

Business Eligibility

To be eligible for a loan, the business must have a City of San Marcos business address that is not in a residential area or residential zoning district. The business must also have a valid and current City of San Marcos issued business license that was issued prior to the COVID-19 crisis and be current on any other governmental permits or certifications that the business is required to have. The business must not have any outstanding fines owed or violations pursuant to any previously issued San Marcos Code Enforcement Notice of Violation(s) or Administrative Citation(s). If the business does not own the building or the land where the business is located, they will be required to affirmatively declare that they were not in arrears on rent prior to February 29, 2020 and they must provide their landlord’s contact information.

Disbursements of Funds

Upon the City’s approval of a Loan and the applicants’ completion of the required Loan Agreement as well as the Promissory Note, the City will make the funds available within 2 business days via wire transfer. The City will endeavor to review applications as quickly as possible given the conditions that exist due to the state of emergency caused by COVID-19 and the availability of staff to complete those reviews.

Final Approving Authority

The City Council has authorized the City Manager to be the approving authority. The City Manager’s decision will be considered final. There is no appeal to the City Council. The City intends to review each application as consistently as possible while at the same time acknowledging that each business will have its own unique set of circumstances. Inconsistencies or missing information on the loan application will be grounds for rejection, as will any inability to provide additional information that the City may request in its review of the application. The City reserves the right to request specific financial information from an applicant should questions or concerns arise regarding eligibility or ability to repay the loan. Applicants have the right to not provide such requested information and the City has the right to consider the refusal to provide such information in its ultimate review of an application. The City will only ask for information that it believes directly relates to eligibility or ability to repay the loan.

Loan Applications

The Business Sustainability Program is approaching fully subscribed. The City will continue to accept applications until close of business on Thursday, May 7. 

All loan applications must be received prior to the City’s official declaration of the end of a local emergency due to COVID-19 or the expenditure of the $3,000,000 allocated to this Program, whichever occurs first. All documents containing financial or other personally identifiable information received in connection with a loan application will be considered confidential and will be redacted appropriately prior to disclosure of the same should a Public Records Act request be received. Additionally, a summary of non-personally-identifiable information may be prepared and/or provided.

The loan application form can be found here or by emailing the City’s Economic Development Director, Tess Sangster at  Completed applications must be emailed to Tess Sangster at the same email address. The City will not conduct in person meetings with applicants unless it determines that such meetings are necessary. Any such meeting will be conducted in accordance with the latest regulations/guidance that has been issued by federal, state or county government/health officials.

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