South Lake Tahoe City Council votes not to collect $382,500 in small business loans | South of Lake Tahoe
SOUTH LAKE TAHOE, Calif. — During the pandemic, the South Lake Tahoe City Council provided $382,500 in small business loans to 53 businesses through its Small Business Sustainability Loan (SBS) program. The loans issued were between $3,000 and $15,000 (one at $3,000, one at $4,500, 33 at $5,000, 12 at $10,000 and six at $15,000). Two other loan applications totaling $25,000 were rejected.
At the Council meeting this week, they voted 3 to 1 to write off the loan balances and give them a grant instead.
The loans were to be repaid at zero percent interest with the first payment deferred until June 1, 2022, and to date only one company has made a payment, $138.89 by La Barberia toward their $5,000 balance. Another $5,000 loan to Burger Lounge is in collection because the company violated state, county and local public health COVID-19 requirements that invalidated the agreement loan. This loan is not forgiven with the new vote.
Mayor Devin Middlebrook was the lone dissenter, saying many businesses could repay the loan and the funds could be better spent on other items. Although the other board members voted to make the loans a grant, they also supported John Friedrich’s idea for companies to pay them back and use their loan repayments as support for a non-profit organization. local.
“Others might have applied if they had known it was going to be forgiven,” Middlebrook said of the loans.
In January 2021, the city council originally approved $700,000 to be allocated from the city’s undesignated fund balance to establish the SBS program. Since not all had been requested, the remainder were reallocated for one-time payments to fire and police safety and other personnel in recognition of the continued risk and exposure to the COVID-19 virus. .
A short-term economic task force was formed to discuss how to help businesses, and the loan scheme was one way they supported. The city’s finance director, Olga Tikhomirova, told the council it would be a burden on her staff to manage a seven-year repayment plan for the 53 businesses, and the time spent could be better spent on others. tasks.
“Forgiveness will help businesses,” Councilman Cody Bass said. “It’s a wise use of ARPA funds to relieve them of debt. It will help our economy and help businesses.”
The City received funds from the American Rescue Plan Act (APRA) and will use the balance to replace what was loaned to the general fund.
Bass made the gesture of forgiveness. “I strongly encourage donations to community organizations,” he said.