The city is directing at least $25 million in federal coronavirus relief aid to help very small businesses on Oahu.
Honolulu Mayor Kirk Caldwell on Tuesday announced the program offering grants up to $10,000 to businesses that have no more than 30 employees or $1 million in annual revenue and a commercial address.
The program is slated to start accepting applications Monday, and if it does well, Caldwell said, another $25 million will be added.
Caldwell said the Small Business Relief and Recovery Fund will help mom-and-pop shops and other very small businesses thaw out after being frozen by emergency stay-at-home orders that were established to stanch the spread of COVID-19.
“It had huge consequences on business,” he said. “Now we need to start thawing out.”
The money for the program is coming out of the city’s $387 million share of the $2.2 trillion federal Coronavirus Aid, Relief and Economic Security package passed by Congress in March.
About $130 million from CARES is paying for city first responder costs, and another $25 million to $50 million is going toward a grant program the mayor announced last week to give the most needy Oahu residents up to $1,500 a month to pay household and child care expenses for up to six months.
Sherry Menor-McNamara, Chamber of Commerce Hawaii president, said assistance is critical for businesses in the state.
Menor-McNamara, who participated in the mayor’s presentation, cited a recent survey by her trade organization that indicated 1 out of 4 Hawaii businesses won’t survive the current crisis without more financial aid.
“We know this grant created for small businesses will definitely help them stay alive,” she said. “Every little bit counts.”
With $25 million the city could issue about 2,440 grants at the maximum $10,000, which includes a 2.5% administrative fee for four nonprofit credit unions retained to process applications.
The city grant program is being established after about 11,000 Hawaii small businesses obtained $2 billion in potentially forgivable federal loans through the U.S. Small Business Administration’s $349 billion Payroll Protection Program in April. A second PPP round with $310 billion is still being processed.
The average PPP loan size for Hawaii businesses in the first round was about $177,000 and included businesses with up to 500 employees that SBA generally defines as a small business.
PPP loan proceeds are mainly reserved for paying employees, though up to a quarter of a loan can be used to pay other operating expenses and still allow the borrower to have the whole loan forgiven.
Under the city’s grant program, proceeds can be used for general operating expenses and also to modify establishments to comply with rules for reopening that can include required spacing between customers.
The city is allowing many retailers to reopen starting Friday. Caldwell said Tuesday that his administration is working hard to allow restaurants to open by the end of this month or the first week of June.
Caldwell made his announcement at a news conference on a busy corner of South King and Keeaumoku streets flanked by small businesses, including restaurants Lobster King, Sasabune, Yajima-Ya and La Pizza Rina.
Applications for grants will be processed on a first-come, first-served basis.
More information including how to apply will be available at oneoahu.org.
Businesses applying for grants do not need to be members of the credit unions processing applications. These lenders are Hawaii State Federal Credit Union, Honolulu Federal Credit Union, Aloha Pacific Federal Credit Union and HawaiiUSA Federal Credit Union.
“We really want to open this up to as many small businesses as possible,” said Andrew Rosen, CEO of Hawaii State Federal Credit Union. “We look forward to helping our small businesses get up and running again.”
Karl Yoneshige, CEO of HawaiiUSA Federal Credit Union, added, “This is really important. Small businesses are really important to the lifeblood of Hawaii’s economy. We need to keep them alive.”
Ed Hawkins, executive director of the city Office of Economic Development, said the goal for distributing grants to small businesses is about two weeks, with three business days to turn around applications and five to seven business days to deliver proceeds.
“This is a way to get them back, get them working and get them incorporated into the community again,” he said.