Gap Fund FAQ and Support

The Gap Fund FAQ is a resource to answer your questions about the Energize Colorado Gap Fund. If you can’t find what you’re looking for, please contact us at:  [email protected]  

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GENERAL

What is the Energize Colorado Gap Fund?

The Energize Colorado Gap Fund will provide more than $31M in small business loans and grants to boost small business enterprises that are the economic engines throughout the state. Sole proprietors, businesses and nonprofits with less than 25 full-time employees can apply for up to a $15,000 grant and a $20,000 loan for a possible combined total of $35,000 in financial assistance. Anyone eligible is welcome to apply, preference will be given to small businesses majority-owned by minority, women or veterans and or located in a rural area, and that have not been successful in pursuing and/or receiving funds from other federal, state and local assistance programs such as the Paycheck Protection Program.

What are the differences between the nonprofit and small business applications?

Nonprofits must meet the eligibility criteria for all “small business’ AND the mission and/or programs of the nonprofit entity should directly support economic development

Once selected, the application system will direct nonprofits to complete questions that apply to nonprofits only.

In the body of the application, nonprofits will be asked to describe how the nonprofit’s mission and programs directly support small businesses, tourism, or economic development. Tourism is an earmarked priority set by SB20-222. Nonprofits should look at the specific language in the application and consider how their mission may align to the tourism industry in answering this question.

The demographic questions that affect the “preference” points for applicants consider the population served by the nonprofit. The nonprofit will need to answer yes/no whether its mission and programs primarily serve racial or ethnic minority, women, veteran, or rural businesses? Board and management composition does not impact demographic “preference” for nonprofits.

In general, nonprofits that provide direct services to small businesses are eligible as are non-profits in the tourism sector as defined in SB20-222.  Nonprofits that provide services to individuals, though critically important, are not the focus of the Gap Fund. We encourage social service nonprofits including food banks, animal shelters, homlessness support, childcare, healthcare, libraries, fraternal and membership organizations to look for resources here:  https://www.coloradononprofits.org/covid-19-coronavirus-resources

Eligible Nonprofits Include:

  • Economic Development Organizations
  • Chambers of Commerce
  • Downtown Associations
  • Local Visitor Bureaus
  • Tourism Associations
  • Cultural Events & Facilities Organizations
  • Arts/Entertainment Organizations
  • Performing Arts Organizations
  • Theatre Guilds
  • Arts Alliances
  • Film Festival Organizations
  • Scenic Railways
  • Museums
  • Outdoor Recreation and Access Organizations

How does this work?

The Governor and the State Legislature have designated a $20 million dollar grant from the CARES Act to distribute alongside $5 million in loans from private donors and other state funds to help Colorado’s micro and small business owners.

Colorado Housing and Finance Authority (CHFA) holds and distributes our funds.

A small business may apply for a combination of loan and grant money through this Gap Fund.

The Gap Fund will receive a mix of loans and grants to provide to local lenders.

Distribution of funds will follow guidelines and allocations established by the Executive Committee.

Our Executive Committee is a diverse group of members experienced in lending and community development, as well as leaders representing the communities we aim to serve.

Funds will be broadly distributed across the group of community lenders with the goal of addressing the critical needs of micro and small businesses across all counties of the entire state.

Our Executive Committee will monitor how these loans are used, address special needs, and report back to the state.

What is the cut off date for applications?

CHFA is managing the fund and will be establishing the windows when applications will be opened and closed. If you sign up for our newsletter, you will be notified as soon as they are announced.

UPDATE:

  • Round One applications closed September 14, 2020.
  • Round Two applications closed October 28, 2020.
  • This is a multi-year program, there will be more rounds.

An applicant may apply for funding more than once. This may be considered if;

  • The financial loss from March 1, 2020 – time of application was less than $15k
  • Additional loan funds are desired

Can I use my phone to apply?

Yes, the application process is mobile-enabled. Documents can be photographed and attached to the application.

Is the Gap Fund first come first serve?

No, we will not assign grants and loans in the order applications come in.  Applications will be reviewed together in phases to ensure they meet all Gap Fund requirements and eligibility.  We would prefer an applicant to spend adequate time on their application rather than rush, contact the technical assistance team with any questions.

I started my business during COVID, am I eligible?

New businesses are eligible, but economic hardship must have been realized to be reimbursed. This means a business can not use projected, unrealized expenses or income as a way of proving economic hardship.  You must be able to demonstrate an actual (not projected) impact on your business.

How does the process work? What is the scoring rubric for applications to the Gap Fund?

All eligible businesses are encouraged to apply, this scoring rubric will be used to determine the priority level granted to each applicant.  This is not a first-come first-serve process.  Businesses owned by women, veterans, racial and ethnic minorities, and businesses located in rural areas will be prioritized for assistance – though they won’t be the exclusive recipients. We’ll also prioritize those who have not received PPP loans or other federal, state or local funding. 

Distribution of funds will follow guidelines and allocations established by the Executive Committee.  Colorado Housing and Finance Authority (CHFA) holds and distributes the funds.  Our Executive Committee is a diverse group of members experienced in lending and community development, as well as leaders representing the communities we aim to serve.

Funds will be broadly distributed across the group of community lenders with the goal of addressing the critical needs of micro and small businesses across all counties of the entire state.  Our Executive Committee will monitor how these loans are used, address special needs and report back to the state. 

How is the Gap Fund different from PPP?

Many deserving businesses have historically had difficulty accessing capital and the COVID-19 pandemic increased this problem. Other businesses were ineligible for programs such as PPP loans. Even for those lucky enough to have received assistance, the amount is often insufficient to survive the lasting effects of the pandemic. These are the businesses and nonprofits we seek to help.

If approved, when will the funds be available?

It’s going to depend on the grantor or lender. It is our desire to move the funds as quickly as possible.

Can I upload my SAM (System for Award Management) Certification?

There is an option to provide your SAM Certification in the documents section. It is not required to submit with your application, it is optional.

I am transgender, do I need to declare myself as a man or a woman?

Please select whatever gender you identify with in the application.

How are applying businesses prioritized for funding?

All eligible businesses are encouraged to apply, this prioritization rubric will be used to determine the priority level granted to each applicant.  This is not a first-come first-serve process. Businesses owned by women, veterans, racial and ethnic minorities, and businesses located in rural areas will be prioritized for assistance – though they won’t be the exclusive recipients. We’ll also prioritize those who have not received PPP loans or other federal, state or local funding.

How does the distribution of funds work? 

Distribution of funds will follow guidelines and allocations established by the Gap Fund’s Executive Committee.  Colorado Housing and Finance Authority (CHFA) holds and distributes the funds.  Our Executive Committee is a diverse group of members experienced in lending and community development, as well as leaders representing the communities we aim to serve.

Funds will be broadly distributed across the group of community lenders with the goal of addressing the critical needs of micro and small businesses across all counties of the entire state.  Our Executive Committee will monitor how these loans are used, address special needs and report back to the state.

ELIGIBILITY

Who is eligible to apply?

Small businesses/enterprises – Colorado sole proprietors and registered small businesses in good standing with the state and nonprofits who support small businesses.

  • Small businesses and nonprofits must have fewer than 25 employees. An employer may use its off-season employee count.
  • Priority will be given to the following, but all eligible Colorado-based micro and small businesses may apply:
    • Black, Indigenous, People of Color, Veteran-owned, Woman-owned or rural businesses
    • Rural areas are defined as:
      • A county with a population of less than fifty thousand people
      • A municipality with a population of less than fifty thousand people that is located ten miles or more from a municipality with a population of more than fifty thousand people
      • The unincorporated part of a county located ten miles or more from a municipality with a population of more than fifty thousand people
    • Those that have not been successful in pursuing and/or receiving funds from other federal, state, and local assistance programs such as the Paycheck Protection Program.

IRS classified nonprofit charities and associations. Specifically, those supporting economic development, small businesses, and tourism and those supporting our priority businesses will qualify.  In general, nonprofits that provide direct services to small businesses are eligible as are non-profits in the tourism sector as defined in SB20-222.  Nonprofits that provide services to individuals, though critically important, are not the focus of the Gap Fund. We encourage social service nonprofits including food banks, animal shelters, homlessness support, childcare, healthcare, libraries, fraternal and membership organizations to look for resources here:  https://www.coloradononprofits.org/covid-19-coronavirus-resources

Eligible Nonprofits Include:

  • Economic Development Organizations
  • Chambers of Commerce
  • Downtown Associations
  • Local Visitor Bureaus
  • Tourism Associations
  • Cultural Events & Facilities Organizations
  • Arts/Entertainment Organizations
  • Performing Arts Organizations
  • Theatre Guilds
  • Arts Alliances
  • Film Festival Organizations
  • Scenic Railways
  • Museums
  • Outdoor Recreation and Access Organizations

How does a business show it’s been impacted?

Businesses need to demonstrate and clearly articulate through writing (mentor programs are available for help), the economic hardship their business is experiencing through the business’s choice of documents such as bank records, point of sale receipts, profit and loss statements, or other documents demonstrating economic harm. The types of economic hardships that qualify for assistance through this program include:

  • Loss of revenue due to the COVID-19 public health emergency associated with a stay at home order;
  • Loss of revenue due to the COVID-19 public health emergency associated with a voluntary closure of the business to promote social distancing measures;
  • Loss of revenue due to a decrease in customer demand due to the COVID-19 public health emergency; or
  • Increased costs to operate the business due to the COVID-19 Public Health Emergency.

What about tourism?

Five million dollars of grant money has been earmarked for tourism-related businesses specifically.

Tourism Sector industries specifically include:

  • Hotel, Motel and Lodging;
  • Food, Beverage and Restaurant;
  • Ski;
  • Private Travel attractions and casinos;
  • Other Outdoor Recreation;
  • Tourism-related Transportation
  • Destination Marketing
  • Cultural Event and Facility Groups

The Cannabis Industry is not eligible but what about the Hemp Industry?

Businesses that grow, distribute, or sell Cannabis are not eligible per federal requirements of this program. Hemp businesses will be allowed as long as they meet federal and state guidelines.

Please see the following document for further clarification: https://www.sba.gov/sites/default/files/2019-02/SOP%2050%2010%205%28K%29%20FINAL%202.15.19%20SECURED%20copy%20paste.pdf

Are farmers/farms eligible?

Yes.

I don’t have a way to scan or upload documents? What do I do?

Required documents can be photographed and attached to your application.

If you believe you will need additional assistance, you can contact the Small Business Development Center and they will assign a consultant from their nearest location that can work with you to fill out the application with you. Would you like me to try to connect you so they can work on getting someone assigned to you?

Will it count against me if I apply for the Gap Fund again?

No. If you have received a grant previously, that will be taken into consideration.

What if I can’t find my EIN/TIN?

If you previously applied for and received an Employer Identification Number (EIN) for your business, but have since misplaced it, try any or all of the following actions to locate the number:

Find the computer-generated notice that was issued by the IRS when you applied for your EIN. This notice is issued as a confirmation of your application for, and receipt of an EIN.

If you used your EIN to open a bank account or apply for any type of state or local license, you should contact the bank or agency to secure your EIN.

Find a previously filed tax return for your existing entity (if you have filed a return) for which you have your lost or misplaced EIN. Your previously filed return should be notated with your EIN.

Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at 800-829-4933. The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistant will ask you for identifying information and provide the number to you over the telephone, as long as you are a person who is authorized to receive it. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.

What about a company that has moved to Colorado? Can they use out of state operations prior to their Colorado operations to show COVID impairment?

Yes. All documentation will be reviewed to make sure the facts and circumstances support the stated loss and that the company has moved to Colorado.

Can I apply if I am an immigrant? What documentation do I need to provide?

An individual (i.e. a sole proprietor of a business) will need to provide one of the following:

  • Valid Colorado driver’s license or a Colorado identification card issued by the Colorado Department of Revenue.
  • Valid US passport
  • US Military Identification card OR Military Dependent’s Military ID card
  • United States Coast Guard Merchant Mariner card
  • Native American Tribal Identification Document
  • Valid Foreign Passport with Photo AND valid US Visa AND I‐94
  • Certificate of Citizenship with photo (less than 20 years old)
  • Valid Employee Authorization Document/Temporary Resident
  • Refugee/Asylee I‐94 with photo
  • Valid I‐551 permanent resident card

Are only Colorado small businesses eligible?

Yes, only domestic entities formed under Colorado law are eligible. A Colorado domestic entity is a business registered, and in good standing, with the Colorado Secretary of State. Foreign entities that have filed with the Colorado Secretary of State to conduct business in Colorado are not eligible, for example, a business formed under Delaware law is not eligible.

Are cooperatives eligible to apply? 

Yes. Any domestic entity type that is a nonprofit corporation is eligible.

FINANCIAL

Is this a grant or a loan program?

Both. Monies are available in both a grant and a loan. There is only one application for the Gap Fund.

What is the difference between a grant and a loan?

Grant money provided to an eligible small business is not required to be repaid. A loan has an assigned interest rate and must be repaid over a defined period of time.

If I apply, am I guaranteed a grant or a loan?

No, the Gap Fund is not a first-come, first-serve program. It is a competitive program with priority given to groups listed below. Each application will be thoroughly evaluated and approved if applicants meet the criteria. While we hope to help as many people as possible, these funds will eventually run out and all applicants are not guaranteed a grant and/or loan.

What will the loan payments be like?

For loans specifically, the maturity rate is 24 to 36 months. The interest rate is:

  • 0 to 4 months payment deferment
  • Initial 12 months: 1%
  • After 12 months: 1.5%

What are the terms of the loan? Anticipated loan terms?

  • Principal amount: $5,000-$20,000
  • The maturity rate is 24 to 36 months.
  • The interest rate is: 0 to 4 months payment deferment and no interest / Initial 5-12 months: 1% / After 12 months: 1.5%
  • No payments the first 4 months. No prepayment penalty.
  • Secured Loans: mix of structures including personal guarantee, collateral, and possible prohibition on additional debt without consent.

Are there limits on what I can spend my loan or grant on?

Yes, loans may be spent on items agreed to by the lender. Grants may be used to reimburse:

  • Loss of revenue due to the COVID-19 public health emergency associated with a stay at home order;
  • Loss of revenue due to the COVID-19 public health emergency associated with a voluntary closure of the business to promote social distancing measures;
  • Loss of revenue due to a decrease in customer demand due to the COVID-19 public health emergency; or
  • Increased costs to operate the business due to the COVID-19 Public Health Emergency.

Examples of allowable expenses include:

  • Payroll costs
    • Increased workers compensation cost due to COVID-19 pandemic
    • Premium Pay
    • Hazardous duty, physical hardship in case related to COVID-19 pandemic
    • Overtime related to COVID-19 pandemic
    • Employee stipend if deemed necessary due to COVID-19 emergency provided on a reimbursement basis
  • Rent to mitigate COVID-19 impact
  • Equipment
  • Real property
  • Livestock depopulation deemed necessary for public health reasons
  • Programs to implement COVID-19 social distancing measures
  • Training to mitigate the impact for employees furloughed due to COVID-19
  • Inventory for items to mitigate COVID-19 impact

Your grant or loan cannot be spent on:

  • Expenses that have been or will be reimbursed under any other federal program
  • Losses that have been or will be covered under any other federal program
  • Taxes
  • Lobbying
  • Capital Purchases or Construction
    • Capital purchases are defined as expensed greater than $25,000 with a usable life of five years or more.

How will I receive the funds if awarded?

Checks will be issued by mail by the grantor or lender, unless the grantor or lender indicates otherwise.

If I receive a loan, are there any prepayment penalties?

No, there are no prepayment penalties with Gap Fund loans.

Will my chosen lender pull my credit? Are there credit requirements?

Credit scores will not be pulled for grants.  For loans, credit requirements will be dependent on the lender and the lender may pull an applicant’s credit. Our lenders are encouraged to be more flexible around their default rates, allowing their underwriting to be more liberal, giving more people access to loans.

As a nonprofit, how do I document my impact on economic development as required?

Nonprofits must describe how their mission and programs directly support small businesses, tourism, or economic development. A nonprofit’s mission/bylaws, activities, and population it serves can all be used as evidence of the organization’s tie to eligibility. This answer can be written as a narrative and does not require upload of supporting documentation. However, the granting agency may request additional information such as; annual report/marketing materials/excerpts from grants/any impact data.

What is the maximum amount I can request from the Gap Fund?

You can request a combination of a grant and a loan with a maximum of $35K total. $15K grant + $20K loan = $35K max request.  The first $15K of request may be 100% filled by grant.

Are Gap Fund grants and loans considered taxable income?

Gap Fund grants are provided through the federal CARES Act and are considered taxable income. Grant recipients will receive a Form 1099 for reporting this income to the IRS. Gap Fund loans are not considered taxable income.

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