Since the beginning of 2020, the nation has been in the throes of the pandemic, and it seems as though the end is nowhere in sight. The unemployment rate is at 8.4% as of August and businesses are shuttering for good across the U.S. as the struggle for financial support continues.
Amid this deep economic hardship, some cities have launched initiatives to help keep their local entrepreneurs afloat, by providing not only grants and resources to small businesses in their communities, but specifically supporting minority owned companies.
In Michigan, the Detroit Economic Growth Corporation (DEGC) has been aiding small businesses in various ways since its inception more than 40 years ago by consistently partnering with city government to support economic development initiatives. When the Michigan Economic Development corporation (MEDC) allocated CARES Act funding to economic organizations across the state, DEGC was able to secure $800,000 to award relief grants to small businesses in Detroit.
“We recognized really early on that this was something that was unlike anything we’ve ever dealt with before,” said Drew Lucco, DEGC’s small business development manager who oversees the nonprofit’s grant programs. “We wanted to get capital into the hands of entrepreneurs as quickly as possible.”
Throughout the course of the pandemic, Michigan has had over 120,000 cases and over 6,000 deaths. The state’s economy hasn’t fared well either. In April, Michigan’s unemployment rate was 24% and only just dipped below the national average in July.
As the pandemic tore through the state, taking livelihoods and companies with it, Lucco said the DEGC realized that the demand for a small business relief grant would surge, so the nonprofit reallocated funds from its other programs to be able to provide more. DEGC combined the $800,000 they previously received with funding from Motor City Match — a program that connects entrepreneurs with a space to work and some funding to accelerate their ventures –and the city’s casino loan fund. This boosted its first Small Business COVID Relief Fund to roughly $3.8 million.
The fund’s process started at the beginning of April and by June, DEGC dispersed all of the money across 741 grants to small businesses, 69% of which were awarded to minority-owned businesses and 5% to woman-owned businesses. To continue supporting entrepreneurs and small businesses, the nonprofit has received another fund allocation from MEDC of about $7 million to do a second round of grants. Applications for the second fund closed nearly a month ago and DEGC is in the works of completing the evaluation process and notifying awardees. Overall, the nonprofit received nearly 6,400 applications in total for both funds. Grants are capped at $20,000 so anyone awarded in the first round is eligible to receive funding up to this amount if they choose to apply again for the second fund.Beyond financial support, the DEGC will also help entrepreneurs and small businesses with technical support, making sure businesses are up-to-date on their tax information and other documents for federal loans.
“There’s definitely been a concerted effort city-wide to mobilize resources, not just capital, but also support services and I think that will be ongoing,” Lucco said.
In Charlotte, the Foundation for The Carolinas is working to boost philanthropic activity by offering innovative solutions to entrepreneurs, nonprofits and businesses across 13 counties. The foundation works closely with the City of Charlotte through its comprehensive Open for Business initiative, which is supporting small business owners and workforces in the city through COVID-19 recovery. This initiative encompasses the $30 million Access to Capital Small Business Recovery grants program, which the City of Charlotte charged the foundation to oversee. Depending on the number of employees, grants of either $10,000 or $25,000 will be dispersed to small businesses headquartered in Charlotte.
“We are really trying to hit those companies that have not received any other assistance,” said Holly Eskridge, assistant economic development director for the City of Charlotte.
The grant program is supported by CARES Act funding and launched at the end of June. Awards are announced every two weeks on a rolling basis and of the 4,712 applications received, the program has dished out close to $17 million across 1,431 grants. Eskridge said the program is putting an emphasis on supporting minority business owners. Of the grants awarded so far, 46% have gone to Black-owned businesses, while 63% overall went to minority-owned businesses. In terms of gender breakdown, 54% of awards went to men, 45% went to women and 1% of awards went to non-binary individuals. Overall, 30% of the awards went to startups that have been in business for one to three years.
“We feel really good about that, as far as when we said we wanted to be an inclusive program and an accessible program that was representative of our small business community. I feel like we’ve gotten there,” Eskridge said.
The City of Charlotte has other grants programs for COVID relief, and it will continue serving the local small business community mainly through its Open for Business initiative.
“We started it off really just to have helpful resources for our small business community specifically, but we really are starting to grow it out so that it talks about workforce development, business recruitment. It’s all types of things,” Eskridge explained.
Eskridge said the city is also working on launching a three-part virtual series encompassing crisis management, business continuity and resiliency plan development for small businesses to learn how to make it through unpredictable events like a pandemic.
As business owners across the country navigate this unprecedented time, initiatives like the ones happening in Charlotte and Detroit are not just important for getting through the current moment, but also for educating businesses on how to wade through tough times. This year’s recession is unlike anything the country has ever dealt with, but it almost certainly won’t be America’s last economic downturn. For Eskridge, it’s about making sure entrepreneurs in her area are able to keep their doors open, even during a crisis.
“Small businesses need to have a plan for how they’re going to continue operation. They need to think through that proactively.”
This story is possible thanks to support from the Ewing Marion Kauffman Foundation, a private, nonpartisan foundation that works together with communities in education and entrepreneurship to increase opportunities that allow all people to learn, to take risks, and to own their success. For more information, visit www.kauffman.org and connect at www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.