New Britain offers no-interest loans to small businesses in low-income neighborhoods

Looking to help struggling small businesses and combat high unemployment, New Britain is offering low-interest loans in targeted, low-income sections of the city.

Small restaurants, nail salons, barbershops and similar neighborhood businesses may be able to get $7,500 loans to buy new equipment, install or upgrade security systems, or improve their storefronts and signage.

If a business receiving a loan maintains or expands its payroll levels for five years, the loan is converted to a grant and is forgiven.

“This isn’t meant to assist larger manufacturers — the need is with our corner shop, the bakeries,” Mayor Erin Stewart said. “One of the companies that’s going to apply is a small appliance store.”

The city this week began accepting applications for its new micro-grants program, an effort that will start small but is subject to beef-up funding if it turns out to be very popular, Stewart said.

The city will release names of businesses after the selections are made. Officials said Monday afternoon that a local laundromat was the first applicant.

To be eligible, businesses need to be in one of New Britain’s relatively low-income neighborhood revitalization zones: East Street, Arch Street, North/Oak or Broad Street.

“Under the guidelines, ideally they should be a neighborhood service business — neighborhood grocers, restaurants, small companies that serve a local market,” said Jack Benjamin, the city’s planning and development director.

The city is budgeting $75,000 for the first year and will make awards in two cycles: now through September, and again in the spring.

The Biden administration has been pumping more federal aid into cities and towns during the pandemic, and that’s enabling New Britain to redirect some Housing and Urban Development money into the micro-grants.

“We’re going to use HUD funds to directly benefit small businesses that have a handful of employees and that are going to maintain employment,” Stewart said. “They just need a little leg up. We’ve had inquiries from so many small business owners since the pandemic asking for help.”

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Benjamin and Stewart said that $7,500 can mean a lot to a small company that is making its rent and payroll but struggling to pay for any business improvements.

The micro-grant is intended for those businesses to buy or upgrade surveillance cameras and burglar alarms, or perhaps replace costly equipment for their operations.

The other purpose —signage — can benefit the entire block, Benjamin said.

“A byproduct can be a little neighborhood beautification,” he said Monday. “There are a lot of places that are ripe for new signs.”

Companies must provide financial statements, copies of their lease or deed, a credit report and other documentation.

Each year after receiving the loan, they must provide evidence that they’ve maintained or increased their employment level. Each year, 20 percent of the loan will be written off, until the entire amount is forgiven in five years.

New Britain’s July unemployment rate was 6.5%, among the half-dozen highest in Connecticut. Preserving existing jobs in poor neighborhoods — and perhaps adding new ones — is essential, Stewart said.

“For people in customer service-oriented jobs, it’s especially difficult as more and more of those jobs aren’t available any longer,” she said. “We know a lot of people are struggling to make ends meet.

“And our human services office has seen an influx of people looking for help navigating the hiring process. Sometimes people work at a local neighborhood business for years; it closes and they haven’t had to do a job interview before.”

Don Stacom can be reached at [email protected]