Arcata sets up $250,000 emergency business loan program, and its name is BRELP

Kevin L. Hoover
Mad River Union

ARCATA – Arcata businesses that are running on fumes during the present Coronavirus lockdown have a new glimmer of hope thanks to the City of Arcata and its City Council.

Community Development Director David Loya.

The council Thursday night unanimously approved Resolution No. 190-63, which creates a Business Resiliency Emergency Loan Program (BRELP). The BRELP is a direct lending program with $250,000 to spend on local businesses that are in dire straits thanks to the collapse of the economy as we knew it, and if you are one of them, the city would like to hear from you right now.

"We're really looking to get rapid response and get cash into the hands of business owners," said Community Development Director David Loya, "so they can retain employees, keep their accounts payable current and pay the rent."

The BRELP is intended to keep businesses afloat until state and federal relief to businesses becomes available. "It's a quick life raft until the rescue boat comes," Loya said.

The unsecured loans will carry 2 1/2 percent simple interest, with payments deferred for six months. They might be carried forward into a permanent loan after that.

Potential borrowers are urged to first contact their bank and see about getting a loan there. That could be problematic, since banks are already being besieged by customers with existing loans who are looking for relaxed terms and delayed payments.

If and when turned down by a bank, businesses are asked to call Loya at (707) 825-2045. Intake applications will be conducted by the Arcata Economic Development Corporation (AEDC), with whom the city has partnered.

"If there's a business out there that's bankable and can get a loan from a bank, they should do that," Loya said. "Our program is designed for businesses that can't get bankable loans."

Councilmembers had no issues with extending the program to Arcata cannabis businesses, which employ hundreds of people and which have also suffered under the Coronavirus-related economic collapse. Loya said that a non-federal source of funding is available for those kinds of businesses, since the federal government doesn't recognize them as legal.

From the council's staff report:

Business Resiliency Emergency Loan Program Guidelines

These guidelines are intended to regulate the rapid response emergency lending to businesses in the City of Arcata to provide short-term capital to bridge SBA, Disaster Relief, private lending in response to the COVID-19 response. The City Manager is authorized to amend these guidelines from time to time to ensure they respond to community need. To the extent feasible, this program will be regionalized, combined with regional sources, serviced by regional partners, and/or combined with other similar loan programs. The intent is to ensure consistency across jurisdictions and entities participating in the Business Resiliency Emergency Loan Program.

These guidelines are authorized pursuant to Resolution 190-63.

Loan Terms

Loan Limits: $10,000 in local program funds, $25,000 if combined with regional program Loan Rate: 2.5% APR simple interest
Loan Terms:

  1. Payments deferred for six months from close;
  2. five year amortized thereafter;
  3. unsecured;
  4. no prepayment penalty.

Underwriting: COVID-19 related gross revenue impact; Bank referral; SBDC Loan Counseling; Describe how loan will provide resiliency (term operations extended, reduction in impact to A/P, making existing payroll obligations, etc)

Servicing: TBD Eligible Uses:

  1. payroll;
  2. accounts payable (immediate and necessary);
  3. rent/mortgage payments;
  4. Utilities;


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