Small businesses in the city of Spokane will be eligible for a new loan program starting Wednesday.

The Spokane City Council unanimously approved the use of $100,000 on Monday to help launch the new job retention program, which will provide loans of up to $50,000 to city businesses and nonprofits that have been impacted by the coronavirus pandemic.

The city will invest its share from its Community Development Block Grant funds, which will be used to pay down interest for borrowers, keeping loans at a 5% fixed rate.

The program will be administered by the nonprofit lender Craft3. The aim is to serve small businesses with fewer than 50 employees which have otherwise fallen through the cracks in the assistance provided thus far by the state and federal governments.

“I really appreciate the city digging down and figuring out how to be creative with the limited funds that we have,” said Council President Breean Beggs.

Businesses that receive loans will pay an interest rate of 5% and a loan fee of 2%. When it first announced the program last week, the city said loans would be capped at $25,000; on Monday, that figure was increased to $50,000.

The interest rate will be fixed for the duration of the loan, which will have a term of 48 months. Payments will be fully deferred for the first 3 months, interest-only payments the following three months, and the balance for the final 42 months.

In order to qualify, a business must have been profitable in 2019, have a city of Spokane business license, have been in operation for two or more years and have a credit score of at least 650.

Prospective applicants must first visit the city’s website or call the city’s financial helpline, at (509) 625-6650, to be screened. Those who do not qualify will be directed toward other forms of assistance, while those who do will move on to fill out an application with Craft3.

Craft3 – which partnered with the city to provide loans to Monroe Street businesses during that street’s renovation in 2018 – will ultimately decide which businesses and nonprofits to lend to.

The city has not set a timeline for the application process, but funds are limited.

On Monday, the council passed a resolution intended to help guide Craft3 in the decision-making process.

“It’s a great program, I’m glad we were able to do something like this,” said Councilman Michael Cathcart.

Though its resolution is nonbinding, the council recommended that Craft3 prioritize businesses and nonprofits that have not already received financial assistance from federal or state sources, those with “smaller gross incomes” and those located in census tracts in which a majority of residents earn less than 80% of Spokane County’s median income.