East Grand Forks’ COVID-19 business loan program up and running

It took a while, or at least longer than some East Grand Forks city leaders hoped, but a $260,000 forgivable loan program for Eastside businesses is accepting applications.

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East Grand Forks City Hall

After about a month’s worth of deliberation, East Grand Forks officials finalized a $260,000 COVID-19 relief program for businesses there.

The city’s Economic Development Authority approved on Tuesday, Jan. 19, a forgivable loan program that would dole up to $24,999 to area businesses that have struggled financially during the pandemic. The program is funded by the city government, where several officials have bristled at Gov. Tim Walz’s public health-minded restrictions on businesses statewide. Development authority board members will prioritize businesses affected by those orders , but the loan program itself is open to any business within city limits.

Thus far, five East Grand Forks businesses have applied for the program.

The program offers “forgivable” loans, which means borrowers won’t be asked to pay all or some of the money back if they tick certain boxes. Last week, a subcommittee of the development authority put together those stipulations, which would require, among other things, a business that receives a loan via the program to stay in town for at least three years and retain a rising percentage of the employees it had on staff at its “peak” in 2019 or 2020.

Sixty percent of the loan would be wiped off the books if a business stays open and operating for a year and keeps at least 25% of its employees; another 20% would be forgiven if it stays for a second year and keeps at least 30% of its employees; and the remaining 20% of the loan would be forgiven if it stays for a third year and retains at least 35% of the employees it had in 2019 and 2020.


“So after three years, it’s done,” Council member Dale Helms said Tuesday. “The reason we raised the employees is because we felt that if they can survive the first year then the employees should be no problem for the next two years.”

There are other requirements, too, most notably that borrowers must stay on the lawful side of executive orders issued by Minnesota’s governor. They’ll default on the loan if a judge determines they’ve violated an order, which, per the stipulations assembled by the development authority subcommittee, means the business would be on the hook for any unforgiven parts of their loan immediately.

City officials and employees took a hands-off approach when bars, such as the Boardwalk Bar and Grill and Joe’s Diner reopened despite Walz’s orders last month. Requiring that a judge in a courtroom or administrative law hearing determine a business isn’t following gubernatorial orders takes those decisions out of the city and development authority’s hands, too.

East Grand Forks City Council members initially OK’ed the $260,000 for the program on Dec. 21, but it took about a month to assemble it because the Christmas and News Years holidays presented a logistical barrier, and because the criteria for loan forgiveness bounced between the development authority and its subcommittee . Authority board members asked the committee, which consists of authority officials and a few staff members, to come up with tentative loan criteria, but committee members decided instead to wait until a similar, state-funded program administered by Polk County apportions COVID-19 business grants.

That annoyed some city council members , and the development authority asked the subcommittee to complete the criteria last week before voting on it Tuesday afternoon.

The deadline to apply for the city’s program is Friday, Jan. 29. City staff expect to determine which businesses will receive loans on Feb. 9 and the money could hit their bank accounts as quickly as Feb. 10, but, in practice, it would take one to three weeks, according to Paul Gorte, East Grand Forks’ economic development director.

“To a large degree, the (loan) closings are going to depend upon the businesses themselves, rather than anything the city does,” Gorte told the Herald.

Now that the city and development authority’s program is up and running, that makes a total of two separate local programs for Eastside businesses that want a pandemic cash infusion: the forgivable loan program and a county grant program.


Polk County’s grant program is paid for via a $216 million agreement among Minnesota lawmakers. The county has $622,000 to administer, of which $200,000 has been apportioned to East Grand Forks. City leaders are set to recommend a set of businesses that they feel should receive that money, but the final determination is formally up to Polk County commissioners, who are set to meet next month to finalize that.

Joe Bowen is an award-winning reporter at the Duluth News Tribune. He covers schools and education across the Northland.

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