FROM:
Development Services
SUBJECT:
Title
Resolution of the City Council of the City Of Fontana, California Approving and Adopting the Fontana Business Assistance Loan Program and Guidelines
End
RECOMMENDATION:
Recommendation
1. Consideration of Resolution No. 2026-079, to approve and adopt the implementation of the Fontana Business Assistance Loan Program, subject to Guidelines and attachments.
2. Determination that the City Council’s actions are not subject to and otherwise exempt from the California Environmental Quality Act (“CEQA”).
End
COUNCIL GOALS:
• To concentrate on job creation.
• To pursue business retention, expansion, and attraction.
• To revitalize commercial corridors and neighborhoods.
• To provide for the development of a thriving business community in the downtown core.
• To improve the overall business climate and quality of life in the City.
DISCUSSION:
A thriving local economy is essential to the quality of life of the City and its residents. Cities with strong commercial corridors and economic communities benefit through the availability of local options for shopping, dining, and recreation, increased aesthetic quality of commercial areas, and higher tax revenues for the local government. Support for local businesses, particularly in commercial cores, encourages a vibrant local economy and avoids blight from underutilized or abandoned buildings.
One of the goals of the City of Fontana is to encourage the location and continued operation of new businesses in the downtown Fontana area through business-friendly policies and initiatives.
High start-up costs, which may include the procurement of fixtures, furnishings, appliances, and equipment are a significant barrier to opening a new business. Difficulties securing funding for start-up costs can prevent businesses from being able to open or require them to relocate outside of the City.
Staff is proposing that the City Council adopt a Business Assistance Loan Program (the “Program”), modelled after similar programs conducted in other jurisdictions. The Program would be administered and implemented consistent with adopted Program Guidelines (“Guidelines”) implemented by the City Manager or designee. Approved loan applicants would enter into a Loan Agreement and Promissory Note (“Agreement”) in the form attached to the Guidelines, which contains Program requirements.
The goal of the Program would be to provide one hundred percent (100%) forgivable, zero percent (0%) interest, business assistance loans to businesses which continuously operate in the Downtown Fontana area for at least five (5) continuous years. Early repayment provisions are provided in the Guidelines for businesses which do not operate for the full five (5) year period, or otherwise default on Program requirements.
Staff is proposing that the City Council approve a not-to-exceed aggregate expenditure of $1,500,000 of Capital Reinvestment (Fund 601) dollars on loans pursuant to the Program.
PROGRAM DETAILS:
The key points of the Program are generally described below. More detail is available in the Guidelines and Agreement attached to the Resolution referenced in this report:
• Eligible new local food and beverage, recreation, retail, and entertainment businesses (three (3) months in operation or newer) in the designated Fontana Downtown area may receive up to one (1), zero percent (0%) interest business assistance loan to cover or partially cover the cost of fixtures, furnishings, appliances, and equipment for the business.
• Businesses on City-owned property are not eligible for the Program.
• Loans are approved through an application submitted to the City. The application window will open August 1, 2026 and will close March 31, 2027, subject to City-initiated extensions and available funds.
• Loan amounts are calculated based on the lower of the amount requested, a rate of seventy-five dollars ($75.00) per square foot of operating space, or one hundred fifty thousand dollars ($150,000.00).
• The loans are forgivable at a rate of twenty percent (20%) per year the business continuously operates (2000+ hours per year) in the Fontana Downtown area, provided that the business complies with all terms of the Program. A business that operates without default of Program requirements for a continuous five (5) years would have its loan fully forgiven, and no amount would be due to the City.
• If a business closes or transfers before the five (5) year forgiveness period ends, all unforgiven portions of loans are due within the date that is two (2) years from the date the business ceases to operate in the City, or the date the business is sold or transferred to another person. An earlier date for repayment will apply for events of default, which may include interest due for late payments.
• Businesses must continuously comply with all applicable laws, and maintain all applicable permits, licenses, and approvals to remain in good standing with the Program.
• The Loan will be held by the City and disbursed to the borrower pursuant to disbursement requests listing the eligible expenses. Disbursement requests will be processed until June 30, 2027, after which point all remaining portions of the approved loan would revert to the City.
• The Agreement provides the City with inspection and audit rights if necessary to confirm that loan funds were spent on eligible expenses.
The Guidelines authorize the City Manager or designee to make clarifying and implementing amendments to the Guidelines and to any Agreement which do not increase the cost or risk of the Program or applicable loan to the City. Substantial changes would require further City Council action. The Program would be primarily administered by the Deputy City Manager for Development Services. Depending on administrative burden, the Deputy City Manager for Development Services may determine to delegate program administration to a consultant engaged for that purpose pursuant to a separate agreement, if necessary.
ANALYSIS:
Adoption of the proposed Resolution would authorize and establish the Program. Implementation of the Program would provide the above-described supportive loans to eligible businesses consistent with the City’s economic and development goals.
In the alternative, the City Council could vote not to approve the Resolution, which would not establish the Program.
ENVIRONMENTAL IMPACT:
The City’s adoption and implementation of the Program is not a project for the purposes of the California Environmental Quality Act (CEQA) (Pub. Res. Code, §§ 21000 et seq.) in that there is no possibility that the Program will cause a direct physical change in the environment or reasonably foreseeable indirect change in the environment, and is further exempt pursuant to the “common sense” exemption, in that it can be seen with certainty that there is no possibility that adoption and implementation of the Program and Guidelines may have a significant effect on the environment. (Pub. Res. Code, § 21065; CEQA Guidelines, § 15061.)
FISCAL IMPACT:
The $1,500,000 in project funding will be allocated from Capital Reinvestment (Fund 601) Project #30100004-601-A and is included in the FY 2025/2026 Fourth Quarter Status Report.
MOTION:
Approve staff recommendation.