When Momentum Fitness needed some tender loving financing to carry it through the COVID-19 pandemic, it turned to the Rapid Response and Recover Fund offered by First Southwest Community Fund.
“Even though we have been in business for 10 years, I don’t think we could have gotten a conventional loan to stay afloat when our income was suddenly at zero because of the pandemic. We needed alternate funding,” said Kira Gosney, owner of Momentum Fitness, which has gymnasiums in Bayfield, Pagosa Springs and Mancos.
Loans of up to $10,000 to $100,000 for a seven-year term at a 3.5% interest rate are offered through the RRR loan through First Southwest Community Fund, which was created in 2015 by First Southwest Bank to provide gap funding to mitigate risks for businesses in rural Southwest and Southern Colorado.
Another helpful feature of the RRR loan is that the first six months of loans closed on in 2020 are deferred to aid small businesses cope with added expenses brought on by the COVID-19 pandemic.
Momentum Fitness closed down for 2½ months beginning in late March, and Gosney said some gym members offered to make their monthly payments even when the gyms were closed in an effort to keep workout gyms open in their small communities.
“But we didn’t want to bill anyone when we knew they were probably hurting, too, from the shutdowns,” Gosney said.
Only six months before the COVID-19-forced shutdowns, Momentum Fitness had completed its prime facility, a new, 10,000-square-foot gym in Bayfield, and it had assumed the biggest debt load ever to finance the new gym given some unexpected construction expenses.
“When we got shut down, we had a lot of bills to worry about,” Gosney said. “I thought I was going to die from stress until we got the RRR loan and were able to catch up on our bills. Being locked up at home was stressful enough without also wondering how we were going to support a business that had no income.”
Momentum Fitness was able to reopen its gyms in June, but now it is dealing with increased costs of operation given tighter sanitation requirements and the need for social distancing, the new normal in the age of the novel coronavirus.
Gosney said gym members have been understanding and cooperative about carrying around bottles of disinfectant and sanitizer with them to clean up after each use of equipment.
She estimates the advent of COVID-19 has increased Momentum’s cost for cleaning supplies by $3,000 since the gym reopened in June.
The RRR loan has come in handy covering for unanticipated costs to deal with COVID-19.
“Our gyms are sterile as can be, but it is ongoing financial strain, so we are extra happy about this loan,” she said.
The six-month grace period before Momentum has to make its first payment is another unique aspect of the RRR that provides the firm with time to catch up with debts incurred to reopen and deal with the pathogen that’s upended small businesses across the planet.
Cass Walker Harvey, executive director of the First Southwest Community Fund, said she has fielded 83 inquiries so far about the RRR loan program and funded 11 loans in rural Southern and Southwest Colorado.
She said at least five additional loans are in the pipeline.
“The goal is to provide a fund that would be able to provide low-cost, emergency capital to businesses, especially those who had not received any assistance so far, in all our rural communities.” Walker Harvey said.
Businesses can use the loan money for working capital and other expenses caused by COVID-19, Walker Harvey said.
“We try to keep the uses as flexible as possible because we know that a lot of folks have had really unexpected costs from COVID-19,” she said. “And there isn’t a cookie-cutter solution of capital needs by small businesses. So whether that’s payroll or working capital or inventory, we tried to keep it as flexible as possible.”