Transmittal - 7/25/2023DEPARTMENT of ECONOMIC DEVELOPMENT
ERIN MENDENHALL
MAYOR
LORENA RIFFO JENSON
DIRECTOR
CITY COUNCIL TRANSMITTAL
_______________________ Date Received: ___________
Lisa Shaffer, Chief Administrative Officer Date sent to Council: ___________
__________________________________________________________________
TO: Salt Lake City Council DATE: 7/13/2023
Darin Mano, Chair
FROM: Lorena Riffo Jenson, Director, Department of Economic Development
SUBJECT: Emergency Loan Program Repayment Legislative Intent Follow Up
STAFF CONTACTS: Roberta Reichgelt, (roberta.reichgelt@slcgov.com)
DOCUMENT TYPE: Information Item
RECOMMENDATION:
BUDGET IMPACT: $1M issued for the Emergency Loan Program in FY20.
BACKGROUND/DISCUSSION:
Upon City Council approval for funding from the general fund balance in March of 2020, the
Department of Economic Development (DED) created the Emergency Loan Program (ELP). The
creation of the ELP was a result of the COVID-19 pandemic and the immediate shutdown of many
small brick and mortar businesses and nonprofit operations. The program provided $1M in
funding to small businesses and nonprofits until federal support programs were created and
further financing was received to keep the businesses afloat.
Repayment of loans funded by the Emergency Loan Program was intended to commence 90 days
upon the end of the Emergency Proclamation, however, the impacts of the COVID-19 pandemic
proved to be long lasting and detrimental to the business community. Consequently, in October of
2022, DED proposed a further deferment of repayment to the City Council as businesses and
nonprofits were still struggling to reach revenue levels prior to the pandemic. The City Council
approved the deferment of all loan repayments until December 31, 2024, and also provided
Lisa Shaffer (Jul 25, 2023 14:05 MDT)07/25/2023
07/25/2023
further guidance with three legislative intents. One legislative intent: “That by March 1, 2023, the
Department of Economic Development propose criteria and processes for borrowers that might
not have an alternative to loan forgiveness or write-off.” DED is the proposed criteria below that
will be processed and approved by the department on a case-by-case basis.
To date, four (out of 52) recipients have paid off their ELP loan in full and eight (8) have opted to
begin monthly payments. The majority (92%) of the remaining borrowers, upon expiration of the
deferral period, will owe $333.33/month for 60 months, and the remaining (8%) will owe up to
$250/month for 60 months. All loans were provided at 0% interest, so all payment goes toward
paying down principal balance.
The program did not include any collateral requirements; however, all borrowers signed a
personal guarantee (with the exception of a few nonprofits) that gives the City discretion to
pursue the guarantors personally for nonpayment.
Program Repayment Alternative: Economic Hardship Application
Upon expiration of the deferral period, DED proposes implementing an application process for
borrowers who can demonstrate an economic hardship. A borrower will be considered for partial
loan forgiveness if hardship is demonstrated, or full loan forgiveness if borrower can demonstrate
their business provides some public benefit. The hardship application would request from the
borrowers the following information:
• Personal income status: personal financials for past 2 years
• Business income status: business income for past 2 years (if applicable)
• Business projections for next 3 years (if applicable)
• Summary of personal and business/nonprofit assets, if any
• Narrative that explains the current state of the business’/nonprofit’s financial health and
how full repayments of the loan would provide financial harm to the borrower (if borrower
cannot make repayment).
Proposed Criteria
1) Reduced payment with partial forgiveness, based on ability to pay
Upon receipt of a hardship application, a financial analysis (form attached) would be completed
with the above requested information to determine the borrower's ability to make lower
payments. If the borrower makes consistent payments of the agreed-upon amount for the 5-year
repayment period, the remaining portion of the loan may be forgiven.
a. A re-amortization period of up to 10-year max would be considered to achieve lower
monthly payment amounts (current amortization is a 5-year period)
b. Reduced payment with enhanced forgiveness (up to full forgiveness), based on ability to
pay AND public benefit.
In addition to granting a reduced payment based on financial hardship as outlined above, DED
could consider some type of public benefit to be proposed by the business in determining
enhanced loan forgiveness.
• Borrower must include narrative on how the business/nonprofit could provide a public or
economic benefit to Salt Lake City to qualify for enhanced loan forgiveness.
o Public benefit would have to be objective and quantifiable. (i.e. providing a service
for free or reduced rate to a Salt Lake City resident or business).
o Enhanced loan forgiveness would be determined administratively.
Next Steps
DED will communicate relevant information on loan repayment and partial forgiveness options to
the borrowers by the end of 2023. DED will begin accepting any hardship applications (as needed)
early 2024 and begin the financial analysis process. This will allow for borrowers to have a
decision by the time they are requested to begin repayment on January 1, 2025.
Attachments
Emergency Loan Program Financial Analysis Template
Previous Emergency Loan Program transmittals dated April 13, 2020 and September 14, 2022.
Business Name:
Guarantor(s)
Loan Summary
Original Loan Amount:
Current Loan Balance:
Business Performance Summary
Year 1 Year 2 Year 3 2022 2023 2024 (if avai 2025 2026 2027
Revenue
COGS
Operating Expense
Net Operating Income $0 $0 $0 $0 $0 $0
Depreciation/Amort $0 $0 $0
Cash Flow $0 $0 $0 $0 $0 $0
Debt Service Coverage
ELP Debt Service
Other Debt
Total Cash Requirement $0 $0 $0 $0 $0 $0 $0 $0 $0
DSCR #DIV/0!#DIV/0!#DIV/0!#REF!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!
#DIV/0!#DIV/0!#DIV/0!
#DIV/0!#DIV/0!#DIV/0!
#DIV/0!#DIV/0!#DIV/0!
0.00 0.00 0.00
Amended Annual Debt Payment
Monthly Annual Year to Repay
$0 $0 #DIV/0!
$0 $0 #DIV/0!
$0 $0 #DIV/0!
$0 $0 $0
Personal Financial Data
Assets Liabilities Net Worth
Guarantor #1:$0
Guarantor #2:
Guarantor #3:
Comment:
Personal Balance Sheet at time of Application
Original Loan @ 0%
SLC Emergency Loan Program Financial Analysis
Application Projection Financials from Tax Returns Projection