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“Challengers” releases in theaters on April 26.
Review: “Challengers”
Published April 13, 2024

Businesses: Loans still aren’t enough

The loans are part of a government grant program used to help the economy.

With construction on the Central Corridor light-rail line well underway, businesses along the line are getting some assistance from project planners.

Last week, businesses were able to apply for forgivable loans to help weather the storm through construction. But while the program has been lauded by policymakers as evidence of their commitment to help small businesses stay open during construction, others have doubts.

Tom DeVincke, a lawyer who represented several businesses in a lawsuit against the Metropolitan Council last year, said his clients have a number of concerns with the Ready for Rail Forgivable Loan program. Among those fears is that the loans arenâÄôt enough to sustain a business through construction.

Worth up to $20,000, the loans are meant to help small, independent retail businesses along the corridor. If a business that receives a loan stays on the light-rail corridor for five years, it doesnâÄôt have to pay the loan balance.

DeVincke represented the St. Paul chapter of the NAACP and 10 other businesses in a lawsuit that alleged project planners hadnâÄôt adequately considered how businesses would be affected by construction. Although the project was allowed to go forward, a federal judge ordered project planners to further study the impacts of construction. DeVincke credits that ruling with increasing the Ready for Rail loan pot from $1.5 million to $4 million in April, and therefore increasing the maximum loan to each business from $10,000 to $20,000.

But DeVincke says itâÄôs still not enough, and he intends to talk with the Met Council in hopes of improving the program.

Others counter that the purpose of the loans is to give businesses a little push during construction, not sustain them completely.

Members of the Neighborhood Development Center and the Metropolitan Consortium of Community Developers, the groups that administer the loans, have opened up workshops for business owners looking to apply for the loans. According to estimates from both groups, about 800 businesses along the corridor could be eligible for the loans.

Isabel Broyld, project manager for U7, a nonprofit that provides support to businesses along the corridor, has been conducting workshops on how to apply for the loans.

âÄúWe knew from the get-go that this would not be enough to cover all of the losses,âÄù Broyld said. âÄúBut thatâÄôs not the point of the program. The point is to alleviate the losses [for] those that have suffered the most.âÄù

Not a âÄòfree checkâÄô

DeVincke is also concerned that the loan application process puts âÄúan undue emphasisâÄù on credit history, which DeVincke said puts the city in the position of acting as a bank.

âÄúA government grant program or a forgivable loan isnâÄôt a bank loan,âÄù DeVincke said.

But Nancy Homans, policy director for St. Paul Mayor Chris Coleman, said the application only asks for permission to see a businessâÄô credit history, and doesnâÄôt use it as a factor for approving or denying a grant.

In addition, it may be hard for businesses to know when to apply.

Because the size of the loan is dependent on how much business an owner has lost, it may be best to wait when losses are high to apply in order to maximize the loan. But if a business waits too long, it runs the risk that the $4 million pot will be used up, said Dave Chapman, director for lending operations for the MCCD.

While some are pointing out flaws in the program, other business owners said they are encouraged by the effort.

Chris Ferguson, the Stadium Village business representative for the construction, said the application âÄúasks for a lot less than a bank would ask for.âÄù

âÄúItâÄôs not a free check, which may be what some people were hoping for,âÄù Ferguson said.

Small business owners like Jim Segal of the Ax-Man Surplus Store in St. Paul plan on applying for the loans but are unsure how much it will help. But he said heâÄôs still encouraging businesses to apply for them.

âÄúIf it helps me, then IâÄôll be a big cheerleader for it,âÄù Segal said. âÄúIf not, IâÄôll suck on my own sour grapes.âÄù

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