San Jose throws a lifeline to struggling small businesses
San Pedro Square in downtown San Jose features shops and restaurants. Photo by Eli Wolfe.

San Jose launched a new grant program this week to help small business owners with their back rent as a commercial eviction ban winds down over the summer.

About $2.6 million in federal funds will be allocated to provide up to $15,000 in grants to small businesses or companies still reeling from the economic impacts of the pandemic and COVID-related closures in the past two years. These grants will help cover unpaid or pending rent from March 24, 2020 through Aug. 19, 2021. City officials estimate 300 businesses will benefit from the program.

To qualify, San Jose business owners must fall into specific income brackets. A single-family household must make under $78,550 per year. A family of four must make under $112,125. The business must have less than 10 employees, must have gross receipts under $3 million and have been in business before March 24, 2020. Applications will be accepted until May 30 at 5 p.m.

The program’s launch was strategically timed with the commercial eviction protections ending on Aug. 19, city officials said. In February, commercial tenants had to pay half their back rent to remain protected from eviction. By August, tenants have to fulfill all back rent or risk losing their retail space.

“Direct funds to businesses are the best thing we could do,” Nanci Klein, director of economic development, told San José Spotlight. “And removing a burden like rent allows and supports businesses in maintaining their location.”

This program is the second iteration of a back rent grant by the city. In 2020, the city doled out $3.8 million to more than 300 small business owners. The first time around there were too many barriers for those who where digitally illiterate, lacked broadband access or English wasn’t their first language. This time the city has a lottery system and allows small business owners to apply in person.

“We learned from the other grant programs what are the pitfalls and barriers that make it almost impossible for a small business person,” said Elisabeth Handler, spokesperson for the city’s office of economic development. “It’s very hard for some to apply for these particular programs that are administered by very, very sophisticated financial institutions, so that is the difference with our program.”

Handler said changing the process to a lottery gives everyone an equal chance.

“The larger, better established businesses are not going to really bother to try to get a $15,000 rent relief grant, especially since it goes directly to the landlord,” she said.

However, she did add the city loses the ability to pick business owners in the hardest hit areas, which they were able to do in the first round. In 2020, the city notified people in the hardest hit ZIP codes first.

About 92% of prior grants went to business owners of color and 100% were distributed to low- or moderate-income applicants, according to city documents.

Derrick Seaver, president and CEO of the San Jose Chamber of Commerce, said the grants continue to improve and are more targeted.

“This latest round is really microbusinesses, with some of the lowest amounts of overall annual revenue, often sole proprietorships,” Seaver told San José Spotlight. “So from what we’re hearing circumstantially, this seems to be going better than in the past.”

Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.

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