LEWISTON — City officials are proposing setting aside $500,000 from the American Rescue Plan Act for grants to help small businesses suffering significant financial losses from the COVID-19 pandemic.

Interim City Manager Heather Hunter outlined the debt service plan during a workshop before Tuesday’s special meeting of the City Council to consider changes to the charter.

“This is a permissible expenditure under the ARPA funds,” Hunter said. “The regulation specifically identifies this industry that we’re trying to help, specifically the travel, tourism and hospitality businesses.”

Since the city last month authorized spending nearly $20 million of ARPA funds for two major infrastructure projects — a sewer overflow storage tank and a long-sought second water main for the city — Hunter proposed transferring $250,000 from those projects to fund the debt relief pool. The transfer will lead to an additional $72,000 apiece in interest for bonding.

According to a memo from Hunter explaining the program, a grant focusing on debt service was chosen because the city “felt this is a narrow enough category to base grants awards on that would not have easily overlapped with other ARPA/stimulus funding. Additionally, up to this point, debt service was an ineligible cost under existing programs.”

Businesses will be eligible to receive up to $50,000 if they can show that the impact from the pandemic produced a 75% drop in revenue from the most recent fiscal year prior to the pandemic.

The grant would serve as gap financing to help those businesses cover their losses, but the $50,000 grant may not be enough.

“In some instances that may not be enough of a bridge,” Hunter said. “You might see that changed to $100,000.”

At the maximum amount of either $50,000 or $100,000, between five to 10 local businesses would benefit from the program.

While praising the idea, the council expressed some concern about a few businesses using all the funds, and suggested that the pool be divided in half over a two-year span.

“I would hate to use up all of it for a few businesses, when we could have lots of small applicants,” Mayor Mark Cayer said. “I think we want to be cautious. If three businesses or four come in and eat up a significant portion of that money, six months later we could have three or four small businesses that could have been saved.”

For businesses not eligible for the program, Hunter said there are still three stimulus funding programs available that still have unused funds, which are administered locally, with information provided on the city’s website.

The City Council is expected to take up the proposal at its next meeting Sept. 7.

In other business, the council accepted $62,500 from the National Recreation and Park Association from its Mentorship for Rural Youth Impacted by Opioids grant. The money will be used by the Division of Recreation to purchase equipment to start a mentorship program in January, Recreation Superintendent Nicole Welch said.

Cayer urged Lewiston residents to check the link on the city’s website (www.lewiston.maine.gov/bicentennial) detailing the Maine Bicentennial Parade and the Bicentennial Street Fest on Saturday.  The parade starts at 10 a.m. in Auburn and ends on Main Street in Lewiston about noon. The Street Fest is from noon to 4 p.m. on Lisbon Street between Main and Ash streets.