Dozens of the city’s bridging loans have been approved but none have been closed
More than half of all loan applications received were rejected
The City of Austin has so far approved 52 economic damage bridging loans totaling $ 1,720,400.
This represents nearly 29% of the $ 6 million in Section 108 funds approved by the US Department of Housing and Urban Development for this purpose on April 8, 2020.
But borrowers haven’t seen a penny of it.
“No loans have been closed,” said a statement provided by David Gray, director of public information and marketing for the city’s economic development department.
“The pace of loan closing is up to the applicant once they have received the loan closing documents. The candidate needs time to review the documents and share them with any advisor they may have worked with. ”
Businesses approved for loans
The three pages of the city Dashboard does not provide a list of approved loans. Austin’s Bulldog requested an updated list and Gray provided it.
The list shows that all but nine of the 52 loans were approved for a maximum amount of $ 35,000.
We used the information Gray provided to produce a graph showing how much money so far has been approved for business loans in each municipal district. This shows that:
Kathie Tovo Ward 9 businesses got the most loans and the most money: nine loans totaling $ 326,000.
Leslie Pool Ward 7 the companies obtained eight loans approved totaling $ 257,000.
Ann Kitchen District 5 the companies obtained seven loans totaling $ 245,000.
District 3 of Sabino “Pio” Renteria the companies obtained six loans totaling $ 205,000.
Alison Alter Ward 10 the companies obtained five loan approvals totaling $ 170,000.
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Loans have also been approved for the other five municipal districts, as shown in the attached graph.
You can see a city of Austin menu showing the boundaries of each council district.
Austin’s Bulldog called or emailed half a dozen businesses approved for bridging loans. Most did not respond. Here’s what two business owners who responded had to say.
Fine arts business is funded
Katherine Brimberry, co-founder, owner and master printer at Flat press, was the first company to obtain a bridging loan, in the amount of $ 22,000. (The maximum loan amount for this program is $ 35,000.)
The Fine Art Workshop of Prints, Lithographs, Relief Prints and Monotypes is also a gallery specializing in prints and other works on paper, according to Brimberry’s LinkedIn. page.
In a phone interview, she said she had been working on securing this loan for a few months. In March, she also applied for a loan from the United States Small Business Administration (SBA), a prerequisite for applying for the city bridging loan.
“I had worked with the city before and asked for help. The Economic Development Office told me it was going to be available and I applied, ”she said.
Brimberry said she got approval for the loan about two weeks ago.
“I sent the documents to my CPA for review and got their approval. She said it looked good. I signed it electronically this week, ”she said.
“They would bring the signed documents to the offices to request a check, yesterday or the day before,” Brimberry said.
She gave city staff high marks for the way the process was managed, especially Javier Zarate, the program manager she worked with.
Was the delay a problem? No, of course, I want it ASAP. I delay payment to my creditors as much as possible. I am patient about it. I have enough cushion to hang on… I don’t pay the full rent. ”
Nearby businesses in this area of southeast Austin weren’t so fortunate. She said Fit and Fearless Gym was moving things out of her space. The company’s website said the doors were closed indefinitely. “… Our landlord has not offered any reprieve and many of our students are not ready to go back, that’s understandable.
Owner-instructors Brandon Phillips and Jessica Phillips wrote: “We have provided a place of community and empowerment in Austin for 19 years, so this is not a farewell, but rather see you later.”
Tourism doesn’t take the city’s money
Austin Openings (AO Tours Austin on the website) is a business that relies on tourists who come to Austin and see the sights. Only at this moment there are not many tourists.
Mary Davidson, who co-owns the business with her husband Dow Davidson, said they had gone from 22 visits per week to about three per week.
“We applied for an SBA loan early on. It was the second week of May before we got the SBA loan. It happened exactly the same day they got the town’s bridge loan approval.
“We did not accept the bridging loan”, which should have been repaid with the SBA loan anyway.
Davidson did not want to disclose the SBA loan amount.
“We called the SBA back and were funded within 48 hours. We got a lot less than we hoped for. We’re going to drag it out as long as possible to make it last as long as possible. ”
She said they continued to pay employees even though they had nothing to do. “We can’t afford to lose them or we can’t start over.”
“We are very grateful that the number of people going to hospitals (due to COVID-19) continues to decline. I hope it stays that way. ”
However, the tourism sector has been hit hard. “Until the attractions open and people come back to Austin, there isn’t much to do,” Davidson said. “It was really difficult.”
The capacity of bridging loans far exceeds demand
Information provided by the city indicates that 125 bridge loan applications have been received. In addition to the 52 approved requests, 58 were refused and 15 requests are still under review.
Upon receipt, requests are sent to underwriting, where they are reviewed for cash flow and the ability to repay the loan.
After subscribing, the City Loans Committee reviews all applications.
Once the approved and closing documents are sent to applicants, it is up to borrowers to follow up and provide the necessary documents to release funding.
The City has set aside $ 6 million for this program. A total of 52 loans were approved for a total amount of $ 1,720,000. Some, like Austin Overtures, will end up not taking the money because they already got an SBA loan.
So about two-thirds of the $ 6 million available will not be used unless the demands increase dramatically. Or the city finds another avenue to help more businesses. To use Section 108 funds in any other way, the City would need to obtain HUD approval.
Ken Martin has been covering local government and politics since 1981. During the last twelve years of his career in the Marine Corps, Ken was a financial accountant. Learn more about Ken on the About the page.
Links to the related Bulldog blanket:
City bridging loans approved for 22 of 145 applicants to date, May 18, 2020
City’s bridging loan program takes off slowly, April 27, 2020