They Pumped $8.5 Billion Into Small Businesses. They Want to Do More

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States, cities, and community groups scrambled to launch loan and grant programs for struggling local businesses after the coronavirus pandemic upended life across the U.S. The programs were meant to complement, not be a substitute for, massive federal initiatives including the Paycheck Protection Program, which ran from April through early August. But the local efforts wound up providing aid that meant the difference between survival and failure for many businesses.

Because of immense demand, many of the grant programs in places such as Tampa and Hillsboro, Ore., ran out of money quickly, some within hours. But some communities, desperate to save their independent businesses , have managed to replenish their programs. Many more have been creating new ones and tweaking those that exist to meet shifting needs.

That’s one of the hopeful takeaways from a just-released report by Kennedy Smith, a senior researcher with the Independent Business Initiative at the advocacy group Institute for Local Self-Reliance. Smith assessed almost 900 state and local programs that have deployed more than $9 billion, she says. She’s been tracking them since March, compiling them in ILSR’s Big List of Covid-19 Assistance Programs.

Smith updates the list regularly, checking in with city officials and others running programs. “It's a living, breathing thing,” she says. Her report highlights how nimble many of the community relief programs have been, serving as lifesavers for hundreds of thousands of small businesses.

Still, many small businesses urgently need more help. Most of the weaker businesses are already gone, she says–the programs today are focused on helping survivors adapt. “Those that are left are innovating quickly, figuring out new markets, pivoting.” To be effective, the programs urgently need more funding , according to Smith. Business owners are “desperate and can’t wait for Congress to act. There is enormous demand for these programs.”

Panicked community leaders who rushed to save area businesses by getting them money as quickly as possible in the spring have made their programs more nuanced as the pandemic has dragged on.

They’re adapting to changing needs by helping restaurants and others in colder climates plan for the winter or determining municipal responses to rising commercial vacancies. Some local governments are considering acquiring vacant space and making it available to small businesses on a subsidized rental basis or selling it to them, she says.

Improving access to capital for minority-owned businesses and strengthening government procurement processes to favor independents are two key strategies that local leaders can deploy to help small businesses, according to Smith. (More strategies are available in a separate report of hers.) Smith has been following how the pension fund of Fresno County, Calif., is investing in local lenders that finance small businesses, a move other pension funds could make. A procurement model she’s watching is Glass Commerce, which helps local and state governments buy from small businesses. “Smart moves like that are starting to percolate up,” she says.

Resilient local officials and others haven’t stopped searching for more funds for their programs, Smith says. A coalition of groups representing small businesses in Connecticut is pushing the governor to create a $70 million grant program by using some of the state’s existing federal stimulus funds rather than waiting for a new package from Congress, the Hartford Courant reported.

“With winter coming there’s a whole new push,” Smith says. While not a substitute for direct federal assistance, “we’re going to see another wave of programs at the local and state level.”

Her advice for businesses:

  • Create your own relief program. 
    Not finding grants to help you survive? Ask local leaders to create one, Smith says. There are creative ways for local governments and others to find available funds that will help. One example: Early on in the pandemic, Berea, Ohio’s city council voted to take a pay cut for the rest of the year to come up with an additional $20,000 to help businesses after it depleted its $86,000 emergency relief fund, Smith says. 
  • Talk it up. ​​​
    An emergency assistance program for local businesses and nonprofits in and around Empeoria, Kan., regularly announces grantees on a local radio show. “People tune in, get pumped up, and make donations,” says Smith. “They keep writing checks.”
  • Get trained.
    She also wants business owners to take advantage of technical assistance. Community Development Financial Institutions are great places to start; Small Business Development Centers and local Score chapters can also be helpful, she says. The Taproot Foundation’s Taproot Plus matchmaker program pairs entrepreneurs with one of more than 70,000 professionals who volunteer to hold 60-minute consultation sessions. Areas of expertise include communications, financial forecasting, human resources management, and digital expansion.

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