Five Washington businesses are getting grant funding to help them expand, including creating new jobs, but the city will have protection in place to prevent it from facing a “clawback” should the businesses fail to meet certain conditions.

During its Oct. 7 meeting, the Washington City Council approved promissory notes and legally binding agreements between the city and five businesses. The promissory notes and agreements keep the city from any financial liabilities related to the project if any or all of the businesses default in regard to the grant agreement.

Earlier this year, the council amended the Small Business and Entrepreneurial Assistance Jumpstart grant after learning that an expected $200,000 in grant funding from the N.C. Department of Commerce’s Division of Community Investment and Assistance had been reduced by 12.5 percent.

The businesses will contribute money toward their projects.

Councilman Bobby Roberson said the city would include such protections in any future projects similar to the Jumpstart program. Councilman Doug Mercer has sought such protection for the city for several years.

Under the amended grant agreement’s terms, Tayloe Drug Co. (Hospital Pharmacy) would contribute $97,125 instead of the original $111,000 toward job training, with the goal of creating two new jobs. Eastern Carolina Import Services would contribute $7,875 instead of $9,000 toward the purchase of car lifts and equipment rehabilitation, with the goal of creating one new job. Pamlico Fence would contribute $21,875 instead of $25,000 toward buying a skid steer machine, with the goal of creating one new job.

FRE Plumbing would contribute $1,750 instead of $2,000 toward buying equipment, with the goal of creating one new job. Park Boat Co. would contribute $21,875 instead of $25,000 toward buying a truck and tractor, with the goal of retaining one existing job and creating two new jobs.

Their contributions total $150,500. Combined, the companies plan to retain one job and create seven new jobs, according to grant documents.

Under the SBEA program, businesses are eligible to receive up to $25,000 for each new job created or each existing job retained. Before the funds are released, specific conditions must be met. One of those conditions is that each business must provide the city with a signed promissory note in the amount equal to the grant awarded to that business. This protects the city should a business default on its agreement to create and/or retain jobs.

The businesses have until Jan. 16, 2015, to fulfill their job-creation requirements. They must retain the job(s) for six months at 35 hours per job per week.

Last year, the City Council voted 4-1 in favor of a resolution supporting the submission of an application to participate in the program. Councilman Doug Mercer was the lone vote against the resolution. Mercer said then he’s opposed to give-away programs, which he considers this program to be.

In addition to buying new property and building renovations, the program’s eligible activities include infrastructure improvements (water, sewer, roads) construction of a building or other improvements, construction of tenant improvements/finishes, leasing space in or buying an existing building, purchasing capital equipment and providing job training that can be linked to specific jobs at a specific business.

The Jumpstart grant and businesses’ contributions total $350,500.