MONTAGUE — A program to support small businesses impacted by the coronavirus is expected to start accepting applications early next week. A public hearing on the program was held Monday night, finalizing the details regarding eligibility and available funds.

Through an existing lending service that the Franklin County Community Development Corporation (CDC) provides to small businesses, Montague will provide loans with a maximum value of about $5,000 to “micro-enterprise” companies (defined as having five or fewer employees, including the owners) to maintain their financial viability while the public health shutdown prevents them from working, or forces them to work at a reduced capacity.

The loan will be fully forgiven if the borrower demonstrates with documentation that he or she used the money for permissible expenses. Acceptable uses have to do with maintaining the business, rather than expanding or improving it. For example, the money can be used for payroll, health care, rent, inventory or working capital; but not for renovations. If the loan is forgiven, it is effectively a grant.

Montague has about $58,000 to give away in grants — meaning, it will probably give about 10 or 11 grants. The money comes from a 2019 Community Development Block Grant that had originally been designated for the Spinner Park renovation, but was left over when bids came in lower than expected, according to Montague Town Planner Walter Ramsey.

The Community Development Block Grant is a federal program with rules on what its money can be used for, but Ramsey said the business loan program fits the criteria. Some of the eligibility requirements are determined by the Community Development Block Grant’s rules.

John Waite, executive director of the Franklin County CDC, has described this new program as a stop-gap until more money becomes available from the state or federal governments to support small businesses. He also pointed out that existing small business support programs are open to companies much larger than many stores and restaurants in Franklin County, and that small local companies may be crowded out of such programs.

“This is about keeping jobs in town,” Waite said at Monday’s hearing. “This first chunk of money may be gone quickly, but hopefully there will be more.”

The major qualification for eligibility is that the owner’s income must be less than 80 percent of the area’s median income. The exact dollar amount of the median income varies based on how many people are in the household. For one person living alone, it is about $49,000; for eight people in a household, it is about $93,700.

Also, the company must have been in business as of Dec. 10, and must do at least $20,000 in annual sales. The sales requirement is scaled to the proportion of a full year if the company has not been in business that long.

Companies are not eligible if they have already received support funding through similar programs, like the one offered by the federal Small Business Administration.

All criteria are judged based on the company’s status at the time of the application. So, for example, if a company had more than five employees in February but laid off several in say, March or April, that company might qualify.

Waite said brick-and-mortar businesses will be prioritized, in keeping with the program’s goals of preserving the business community and downtown’s economic viability, although other types of businesses are still eligible.

“Towns want to keep their main streets active,” Waite said. “You don’t want to have empty storefronts. So it’s aimed at those, rather than home businesses.”

The Selectboard didn’t have qualms with any of what was discussed in the hearing Monday.

“I wholeheartedly support this,” said board member Mike Nelson. “A downtown is made up of its businesses and its community.”

“The more we can do to help them, the better off everybody is going to be,” added board member Chris Boutwell.

For updates on the development of the program, and for information on applying, email Walter Ramsey at planner@montague-ma.gov. Ramsey said he expects the program to be fully in place by the end of this week, and he will probably start taking applications on Tuesday, May 26.

Reach Max Marcus at
mmarcus@recorder.com
or 413-930-4231.