One-person business owners who missed out on the first round of state emergency grants will get another chance through a lottery program created just for sole proprietors.
The Community Development Block Grants program started accepting applications July 20 for awards of $5,000, $7,500 or $10,000. The money can only be used for working capital to cover business costs such as rent, utilities and changes needed to reopen under Covid-19 safety guidelines.
The program was set up to supplement the state’s $150 million emergency business grants program, which started taking applications July 6. That program is not available to sole proprietors unless the business is owned by a minority or a woman. Some male business owners had complained about being shut out of that program, which was passed by the Legislature and which used a portion of the $1.25 billion that Vermont got from the CARES Act that Congress passed in March.
The CDBG program, a federal grants program that has existed since long before the Covid-19 pandemic, separately received $4.2 million through the CARES Act. While the state is required to spend 70% of that to serve low- and moderate-income people, Housing Commissioner Josh Hanford – who administers the CDBG program – was authorized to find another best use for $1.5 million of it.
“Once the final approval of the CARES funding through the Legislature sort of made this sole proprietor issue a challenge, I said, ‘What can we do, is there anything we can do?’” said Hanford, who is commissioner of the state Department of Housing and Community Development. “I had the ability at that point to sort of repurpose the CDBG CARES Act money to be for sole proprietors only.”
With just $1.5 million available, Hanford expects that only about 225 individuals or businesses will get grants through the CBDG program.
“We’re expecting a lot more than that to apply,” he said. Ninety people had applied as of July 21, said Joan Goldstein, the state commissioner of economic development.
Todd Wheeler, who runs the one-person Todd the Barber shop in Montpelier, said he hadn’t heard about the CDBG program, which didn’t get the publicity that the much larger $150 million grants program did. He said he would consider applying.
“I’m glad they are doing that,” said Wheeler, who didn’t qualify for the Paycheck Protection Program but did receive unemployment insurance until he was able to reopen his barber shop on May 29.
“I don’t like being very greedy,” said Wheeler of applying for money. Some of his clients have paid him double what they owed for a haircut in recognition of the financial difficulties salons and barbershops have experienced as a result of Covid-19. “But this has definitely aroused my curiosity as far as this grant stuff is concerned.”
The CDBG grant program is designed to help business owners who have no employees and who have lost money as a result of Covid-19. The owners, who must be Vermont residents with no W-2 employees, must be able to document their unmet needs. They must run a for-profit business with annual gross revenues of more than $25,000 and cannot be in the cannabis or firearms business.
The money is sent to Vermont through the U.S. Department of Housing and Urban Development, which excludes those businesses from its funding programs, Hanford said.
Grant applications will be accepted until July 31, and the winners will be determined through a lottery draw on Aug. 14. Checks will be issued starting Aug. 27, according to the Agency of Commerce and Community Development.
Hanford said the CDBG program will use the remaining $3 million in Covid-19 funding for low-income rental assistance over the next 18 months, and for municipalities to pass on to food shelves and other social services.
Wheeler said he’s still making less money than he was before Covid-19 precautions closed his business in March.
“But I’m really happy when people do come in,” he said. “I feel for all businesses. Business owners in this city and in this state are struggling to stay open.”
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