By Dan Spalding
WARSAW – Warsaw City Council moved swiftly Monday night to establish a no-interest loan program for small businesses in the city that have been crippled by the pandemic.
After debating the parameters of the plan, council voted at its April 20 meeting to work with Kosciusko County Economic Development Corporation and provide up to $100,000 for loans earmarked for businesses inside the city.
The proposal heads to the city Board of Works and Safety for final approval.
KEDCo is in the midst of applying for a grant through Indiana’s Office of Community and Rural Affairs (OCRA) for up to $250,000 for its Small Business Relief loan program to assist other small businesses in the county. Details of the KEDCo program can be found here.
The city will rely on a KEDCo committee to oversee the loan program.
The interest-free loans will be for up to $10,000 with a two-year repayment plan that begins six months after it is finalized.
Mayor Joe Thallemer gave council a rough draft of what he thought might be feasible and council then debated how to strike the right balance between providing enough money to make a difference to businesses and still benefiting as many businesses as possible.
The infusion of money by city council to support small businesses is likely unprecedented and comes amid a national health emergency that has led to an economic slowdown across the country as many businesses have been forced to close temporarily.
“This is a good foot forward for our community to show that we care about the businesses in our community and we’re willing to help those small businesses that are in need,” Thallemer said.
The council’s action is similar to proposals being established in other Indiana communities, Thallemer said.
Officials believe businesses will be slow to ramp up after restrictions are lifted.
The creation of a local loan pool is happening simultaneously as Congress prepares to pass another huge relief package, this time with some focus on small businesses.
Local loans could serve as a gap fund while businesses wait for federal help.
“With this kind of bridge support, we can keep people on board until they do secure federal funding,” said Alan Tio, CEO of KEDCo who participated in the online meeting.
Council moved with a sense of urgency and hinted that a second round of financial assistance might be considered in the future.
Councilman Jeff Grose said they need to “throw out a life preserver for as many as we possibly can,” adding he would like to see an aggressive approach on the matter.
Grose suggested revisiting the issue in a few weeks and look at whether a second round is warranted.
Council looked at limiting the money for companies with just a few employees but did not take action on the idea. The KEDCo proposal focuses on businesses with 50 or fewer employees.
Some recognized that the $100,000 won’t go very far, especially if each applicant seeks $10,000.
Councilman Michael Klondaris said they will need to help more than 10 businesses.
Much of the concern seemed to focus on small companies that employ just a few workers.
“Those are the businesses we are really going to need when this ends,” Klondaris said. “As I said before, we don’t want to end up like a ghost town.”
“My thoughts as mayor is to help the smaller businesses that might be flying under the radar and haven’t been able to secure other immediate financial help,” Thallemer said.
The program tentatively will remain open until the end of the year or until funds are exhausted.
The vote by council was 5-0 with two council members, Klondaris and Cindy Dobbins, abstaining. Both are business owners who could choose to participate in the program. Those voting yes included Council President Jack Wilhite and council members Diane Quance, Josh Finch, Jerry Frush, and Grose.