Colorado Passes Two New Programs Providing Loans and Grants to Small Businesses Recovering from the Impacts of the COVID-19 Pandemic
This week, Colorado Governor Jared Polis signed two bills into law providing financial relief to Colorado small businesses. House Bill 20-1413 establishes a $250 million small business loan program for Colorado’s small businesses over the next two years;FN1 and Senate Bill 20-222 creates a $20 million grant program, funded with monies provided under the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), for small businesses affected by the COVID-19 crisis.FN2 Key provisions of each bill are detailed below.
A. Small Business Recovery Loan Program:
HB20-1415 provides loans between $30,000 and $500,000 to small businesses, which must be repaid within no more than five years, unless extended.FN3 To be eligible to receive funds under the program, the business must:
Have its principal place of business in the state;
Have at least five (5) but fewer than one hundred (100) employees;
Demonstrate that it had at least two consecutive years of positive cash flow prior to February 29, 2020; and
Demonstrate that it had a debt-service coverage ratio as of February 29, 2020, of at least one-to-one or higher, as determined by the program’s oversight board.FN4
Any deferrals granted under the program are limited to circumstances of hardship created by the COVID-19 pandemic, and the loans’ interest rates must be lower than those available in the commercial market or bear more favorable terms than those available from a commercial lender.FN5 The bill includes provisions to ensure monies are allocated to counties in proportion to the number of small businesses in each county.FN6
B. Small Business COVID-19 Grant Program:
SB20-222 aims to provide grants to small businesses who were unable to receive funds from the Paycheck Protection Program under the CARES Act.FN7 To receive a grant of up to $15,000 under the program, a small business must specify what the money will be used for, which must relate to responding to or recovering from the impacts of COVID-19.FN8
To be eligible, a small for-profit or non-profit business must demonstrate that it has fewer than twenty-five (25) full-time employees; and has suffered economic hardship caused by the COVID-19 pandemic, including required business closures, voluntary closures to promote social distancing, or decreased customer demand.FN9 $5 million in available grants are specifically allocated to small businesses in Colorado’s tourism sector.FN10
Preferences are provided to small businesses that:
Did not qualify for or receive a loan under the Paycheck Protection Program;
Are majority owned by veterans, women, or minorities; or
Are located in a rural area.FN11
Takeaway
Small businesses in Colorado are encouraged to apply for economic relief provided under the Loan Recovery Program or COVID-19 Grant Program as soon as possible. As we have seen with the federal CARES Act, available monies tend to go quickly. Small businesses and employers with questions regarding how to apply for available funds should reach out to the attorneys at Campbell Litigation, P.C. for more information.
Footnotes:
FN1: HB20-1415, enacting C.R.S. § 24-36-201, et seq., https://leg.colorado.gov/sites/default/files/2020a_1413_signed.pdf.
FN2: SB20-222, enacting C.R.S. § 24-48.5-126, http://leg.colorado.gov/sites/default/files/2020a_222_signed.pdf.
FN3: See C.R.S. § 24-36-205(4)(b)(II).
FN4: See C.R.S. § 24-36-203(4).
FN5: See C.R.S. § 24-36-205(4)(b).
FN6: See C.R.S. § 24-36-205(4)(c).
FN7: See SB20-222 summary, http://leg.colorado.gov/bills/sb20-222.
FN8: See C.R.S. § 24-48.5-126(3)(b).
FN9: See C.R.S. § 24-48.5-126(2)(i).
FN10: See C.R.S. § 24-48.5-126(4)(b).
FN11: See C.R.S. § 24-48.5-126(3)(d).