A proposal to create a small-business bridge loan program for Charleston businesses suffering financial hardships due to the coronavirus pandemic was put on pause Thursday afternoon.
Members of Charleston City Council's Community Development Committee decided to defer any action on the proposal, which would have used about $4 million of lawsuit settlement money earmarked for affordable housing to create the program.
Earlier this week, the group that would oversee the loan, the Local Development Corp., agreed to the partnership. Because that money is tied to a lawsuit settlement with Charleston, City Council would need to vote to set up the program.
On Tuesday night, City Council pushed off a vote because some council members took issue with how it was brought to their attention. Some said proper city policy and procedures weren't followed.
Councilman Jason Sakran, who sits on the Community Development Committee but recused himself from discussion or voting on the measure because he has a loan with the LDC, proposed the idea after meeting with the LDC's chief executive last week and a small group of council members at City Hall last week to discuss it.
Some council members on Tuesday night were also upset African American City Council members weren't included in Sakran's small brainstorm session with a few other board members. A South Carolina Press Association attorney said the series of meetings may have come close to breaching the state's Freedom of Information disclosure law. Sakran said on Wednesday he did not feel he breached that law.
One of the problems posed Thursday was how the money could be used, since the money is tied to Urban Development Action Grants and how the money is used must abide by rules governed by the U.S. Department of Housing and Urban Development.
City Director of Housing and Community Development Geona Shaw Johnson said the money could be used to assist small businesses but there are caveats as to who can receive money and for what.
The city's legal department requested more time to look at who and how the city could help. For example, assistance through UDAG funds could help low- and moderate-income residents, but beyond that, city lawyers wanted more time to review.
Mayor John Tecklenburg said he asked the city's finance director to see how much hospitality tax money the city has available and also asked the legal department to see if that money could be spent to help the city's hospitality business.
"It's all well-founded, I just think the situation is so fluid that we ought to hold off and wait for Congress and see what the timing is like," Tecklenburg said. "I believe we'll find a way to help our local businesses beyond what our state and federal government is doing."
Councilman Ross Appel lauded Sakran for his proposal, saying that his perspective as a small-business owner makes him a "critical voice and a unique perspective."
The loan program would have offered up to $25,000 to businesses with no more than a 3 percent interest rate.
Businesses would be required to submit a one-page application to the LDC outlining their business-recovery plan. That application would also include a 1 percent administrative fee (at most $250 if a business seeks $25,000).
Sakran on Wednesday told The Post and Courier that there was a chance he would have applied for the loan he was looking to set up. On Thursday, in an email to The Post and Courier, he said he no longer would consider applying.