McALLEN —The city partnered with its chamber of commerce to distribute $300,000 in grants to 49 small businesses affected by COVID-19, and within a matter of hours, those funds were already spoken for.

The McAllen Chamber of Commerce opened its application process at 9 a.m. on June 1, and Jaime Gutierrez, general manager of James and James Formal Wear, made sure he was one of the first to apply for a $10,000 grant.

“I was there waiting since 8 a.m.” Gutierrez said.

The family owned company has been in operation for nearly three decades, specializing in tuxedo rentals for weddings, quinceañeras and proms. So when Hidalgo County and the city issued emergency orders calling for a shutdown of nonessential businesses and limited gatherings to ten people or less in mid March — right before prom season kicked off — the company was left with a debt that became increasingly hard to pay off.

“Styles, you know, they come in six, nine months beforehand,” Gutierrez said, explaining the company purchases new clothing lines with credit — months before the start of a new season.

Prom accounts for roughly 30% to 40% of their yearly income and helps pay off that debt, the general manager said.

“Just to kind of give you a rough estimate, between April and May, we rent probably like 3,000 tuxes or so, and this year, obviously, there was probably like less than a hundred,” Gutierrez said. “The coronavirus kind of ruined that stage of our business … If there’s no parties, people aren’t going to be renting or buying tuxedos.”

To make matters worse, the company recently opened a second location in Harlingen.

“So we opened late last year and it was barely starting to pick up, and then this happened,” he said. “So yeah, that kind of affected everything.”

And while the city of McAllen can’t help him with that location, it may be able to offer some relief for his McAllen headquarters.

The city gave the chamber $300,000 to distribute to struggling businesses within its city limits via $5,000 or $10,000 grants. Businesses with yearly revenue of more than $350,000 can apply for $10,000 and those below that mark can apply for $5,000.

Jorge Sanchez, the chamber’s vice president of business development and startups, said the city asked the chamber to distribute $200,000 to smaller businesses and the remaining $100,000 to bigger companies.

“So as soon as the applications opened, we saw a big, big blast,” Sanchez said. “The first day, we saw around 200 applications.”

Jaime Gutierrez, general manager at James & James Formal Tuxedo Wear, arranges scarves on Wednesday in McAllen. (Delcia Lopez | dlopez@themonitor.com)

Thirteen chamber employees have since reviewed those applications thoroughly, and city officials have determined that 87 businesses out of nearly 300 that have applied met the guidelines and qualify for a grant.

However, there aren’t enough funds to award all of them grants, so for now, only 49 will be awarded funds.

“So the funds were actually allocated in the first four hours of opening,” Sanchez said, adding there are nearly 40 other businesses that qualified, but won’t receive funding — at least for now.

Because the program works on a first come, first served basis, those companies are in line to receive funds should the city decide to refund the program.

“My recommendation is, if they feel that they’re too late, it’s not. Our application will close on June 30th,” Sanchez said about businesses that have yet to apply. “Therefore, if the city decides to restock this program, we are ready to go.”

Sanchez also noted the city is also offering zero-interest loans through Liftfund, the largest microlender in the country. The nonprofit will manage $700,000 worth of loans for the city that will be available to small businesses.

“The loan part of it is being taken care of by LiftFund, which is a nonprofit organization that focuses on giving out loans to small businesses that pretty much don’t qualify for a bank loan,” Sanchez said.

Both programs put McAllen’s total investment in helping small businesses recover from the pandemic at $1 million.

Sanchez said the city is working to get those funds into the right hands as soon as possible. He expects to notify the 49 businesses that will receive grants on Friday once background checks are completed.

But don’t expect to see a $5,000 or $10,000 check, he warned participating businesses.

“What we do is, we do third-party pay, meaning that we don’t cut checks to a business or a person. We keep the funds as credit, and they can spend it only if they submit proper documentation, and then they prove that it’s an expense that is approved according to our guidelines,” he said. “So that way we make sure that funds are properly spent, and that they don’t take vacations to Cancun or something like that.”

Gutierrez is hopeful he’ll be one of the lucky ones.

“If we don’t get the grant from the McAllen Chamber of Commerce, I mean, it’s not gonna destroy our business, but we would obviously have to maybe let go of some people,” he said.