Lewiston may offer forgivable loans to local landlords

LEWISTON — After only three businesses applied for an emergency loan program during its rollout last year, city staff is reworking the program, with a proposal to set aside a part of the funding for residential landlords.

At the same time, staff is also looking to loosen restrictions on its small business loans to better meet the needs of the community.

The changes come as city officials await word on what the $1.9 trillion federal relief bill could mean for municipalities in Maine.

During a City Council workshop Tuesday, staff said only $10,680 of the $150,000 loan program has been spent since it was announced in June 2020, and relaunching it with new parameters could potentially help a greater number of small businesses and landlords.

Heidi McCarthy, economic development specialist, said the loan program was meant as emergency funding for businesses that didn’t easily qualify for other pandemic assistance loans and grants that were available at the time. With applications due by July 1, there was also a short window to apply.

She said there has since been more interest.

“At the time this program was released, the state was offering a forgivable loan program. This program is no longer available,” she said in a memo to the council. “With the pandemic continuing to impact business operations, and with limited state or federal options, interest in this program has grown.”

After reaching out to local business and nonprofit organizations, staff said a common barrier to applying for the initial loan was a reluctance to take on a loan that they weren’t sure they’d be able to pay back. The $4,000 loans must be paid back, but are offered at 0% interest.

There were also limits on employees, and an annual sales cap that disqualified potential applicants, McCarthy said.

Now, the city is proposing to increase the employee limit from 50 to 100, and the sales cap from $2 million to $6 million.

Several councilors questioned why the program wasn’t utilized by more people, with Councilor Safiya Khalid saying “the number of applicants just saddens me.”

Misty Parker, economic development manager, said “simplifying the process is exactly why we’re here. We’ve tried to make it as flexible as possible to make it an emergency loan for business that can’t access any other relief programs.”

The plan would also use roughly $48,000 of the remaining funds to offer forgivable loans to small-scale landlords.

McCarthy said while rent relief programs have benefited tenants and landlords, it can also leave landlords relying on tenants to apply or to meet eligibility requirements.

The loans, at up to $4,000, would be available to landlords with between two to eight units, who must also meet other eligibility requirements, including proving loss of revenue due to nonpayment of rent. Eligible uses for the funds would be heating costs, utilities, trash collection, insurance and taxes.

McCarthy said the program began as discussions on how to help landlords with heating costs and other utility payments that were slipping through the cracks. She said she had heard from several landlords that “this is a need.”

In order for the loan to be forgiven, the landlord must be in the city’s rental registration database, remain code compliant, and agree to accept tenants using General Assistance vouchers.

Mayor Mark Cayer said he was “pleased to see this program reworked” in order to potentially fill some gaps for businesses.

McCarthy said staff could massage the program again, if needed, based on additional feedback.

“We’re thinking about how to respond more quickly to some of these barriers as people are looking to apply,” she said.

Also on Tuesday, City Administrator Denis D’Auteuil said there has been “no official communication” to the city so far regarding what Lewiston could expect in funding related to the American Rescue Plan stimulus bill.

The bill includes billions in funding for state and local governments, as well as schools, with Maine slated to receive at least $1.2 billion.

According to the Portland Press Herald, municipal governments in Maine stand to receive about $225 million altogether, and almost half that amount – $110 million – would go directly to five of the state’s largest cities: Portland, Bangor, Lewiston, Auburn and Biddeford.