on Apr 23, 2020
5 Priorities from the Front Lines of Small Business Recovery
We Asked 10 Leading Business Support Organizations What They Need to Help Businesses Now. Here’s What They Had to Say.
Written by Bret Collazzi, Olivia Moss, and Steven Reilly
Earlier this week we posted our thoughts on the vital role that business improvement districts (BIDs), downtown associations, community development organizations, and similar groups are playing as a lifeline to small businesses — and challenges they’re facing delivering help where it’s needed most.
We argued that City and State governments, foundations, and corporate donors should leverage CDBG and other available funding to broaden the impact of these frontline organizations by:
- Providing grants for expanded coaching, translation, technology access, and referrals;
- Incentivizing high-capacity organizations to “adopt” nearby districts to plug gaps in support;
- Building a coordinated support network that informs local and national policy.
We shared these thoughts with 10 leading small business support organizations from across the country, posing two main questions: “If you had extra resources, what would you prioritize to bring our Main Streets back?” and “What should Mayors, Governors, and foundations fund to help you help Main Street businesses?”
The 5 Priorities from the Front Lines that follow represent our distillation of their responses. Click on each Main Street recovery priority to see a more detailed version of their observations – in their own words.
- Fund technical assistance to help businesses access funds and adapt to new realities. All 10 organizations agreed that immediate, expanded capacity for technical assistance is essential to helping businesses access emergency funding and rethink their business models, online presence, and operating plans. They offered creative, place-specific takes on how to direct that technical assistance, including leveraging local tech talent to help legacy businesses go digital. Read More →
- Set aside funds for businesses with the greatest need. An unsurprising lesson from the CARES Act was that first-come, first-serve funding programs benefit the most resourced applicants, and one-size-fits-all rules leave out whole industries (e.g. restaurants and bars that couldn’t commit to restoring full employment by late June, a precondition of loan forgiveness under the federal program). Fixing this, according to our collaborators, requires dedicated funds for the hardest-hit businesses, among them immigrant-owned businesses, food and beverage companies, and the underbanked. Read More →
- Leverage CDFIs and other trusted community networks with financial acumen. Congress’s latest relief package would set aside $60 billion for community banks, credit unions, and CDFIs (nonprofit lenders that exclusively serve low-income, underbanked communities). Cities can make an even greater impact, our collaborators say, by recapitalizing CDFIs and partnering with other community nonprofits and faith-based organizations to reach businesses in greatest need. Read More →
- Ensure a safe and welcoming return to Main Streets. Many expect the recovery will be gradual and, at least until there is a vaccine, episodic. In that context, reassuring people that patronage of Main Street businesses is safe will be critical. Our interviewees suggested that public funds be used to activate the public realm in business corridors. Read More →
- Streamline regulations to support existing and new businesses. One of the 10 Guiding Principles to a Just & Resilient Recovery stated that local government must remove barriers to recovery embedded in regulatory functions, especially for small businesses that are more likely to employ lower-income, less-skilled workers. Leadership of front line organizations agreed. Read More →
We’re grateful to the 10 frontline organizations that shared their experiences and their ideas for action: Accion East, Asian Americans for Equality, Central City Association of Los Angeles, Downtown Brooklyn Partnership, Downtown Vision, Inc., Georgetown BID, Houston Land Bank, Rochester Downtown Alliance, Street Vendor Project, and WHEDco.
As the recovery continues, voices of these organizations and hundreds of others across the country should be front and center as cities, states, and the federal government tackle the urban economic recovery.
HR&A will continue to gather and elevate innovative strategies for economic recovery. Please share your ideas by emailing JustAndResilient@hraadvisors.com.
The following proposed strategies have been edited for length and context and represent a sample of ideas recommended by representatives of the 10 organizations. They do not necessarily reflect the positions of all organizational leadership.
1. Fund technical assistance to help businesses access funds and adapt to new realities.
All 10 organizations agreed that additional technical assistance is essential to helping businesses access emergency funding and to rethink their business models, online presence, and operating plans. They offered creative, place-specific takes on how to direct that technical assistance, including leveraging local tech talent to help legacy businesses go digital.
“If our economy is going to have episodic starts and stops for the next 18 months, we can’t just build a bridge to what we had before, because businesses will once again run out of liquidity. Businesses need to have greater cash reserves to ride out the next episode and diversify their income streams so they can generate at least partial income during downturns. How can you shift your business model so you have more work from customers who are still around during downturns? Helping businesses think through their revenue plans requires hands-on assistance but not much money.”
– Accion East
“E-commerce has become even more important, but many business owners have limited digital literacy, don’t have websites, and aren’t active on social media. We have a hub of tech talent in our downtown capable of developing quick solutions. If we created an organized network of tech talent, we would be able to broker connections among individual businesses, helping more businesses stay competitive.”
– Downtown Brooklyn Partnership
“A post-COVID world will be fundamentally different and could impact demand and consumer behavior for years to come. Retailers, and businesses more broadly, will benefit from mechanisms that reduce exposure going forward. For example, will retailers seek leases that set rent as a percentage of sales, and can local governments help incentivize this type of market behavior? Should cities consider structuring real estate taxes as a value-added tax based on rent?”
– Joe Sternlieb, Georgetown BID
“Business owners who can no longer afford to operate should have support to leverage their loyal customer bases and the investments they’ve made in order to realize their company’s value. Otherwise, too many business owners will be forced to close up shop, instead of selling their business to limit losses and even generate some wealth.”
– WHEDco
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2. Set aside funds for businesses with the greatest need.
An unsurprising lesson from the CARES Act was that first-come, first-serve funding programs benefit the most resourced applicants, and one-size-fits-all rules leave out whole industries (e.g. restaurants and bars that couldn’t commit to restoring full employment by late June, a precondition of loan forgiveness under the federal program). Fixing this, according to our collaborators, requires dedicated funds for the hardest-hit businesses, among them immigrant-owned businesses, food and beverage companies, and the underbanked.
“Almost 60% of our small business clients are very low income, earning $32,000 or less a year. Immigrant small business owners were largely excluded from federal aid through PPP because they don’t have banking relationships or payroll documentation from operating cash businesses. Those who are undocumented immigrants don’t qualify for unemployment insurance, so their income has completely evaporated. Many put up their homes as collateral and equity to fund their businesses, and many borrowed from families or leveraged other assets. Without providing assistance to these types of businesses, the economic impact of a business failure will be devastating and widely felt.”
– Asian American for Equality
“There needs to be a separate fund for independent food and beverage businesses. Restaurants and bars are not only being hit especially hard, but they are vital to retaining employees and office tenants in our downtown.”
– Downtown Brooklyn Partnership
“The Bronx has the lowest share of bank branches per household in the United States – how many of the Bronx’s 18,000 mostly small businesses can we really expect to have strong banking relationships? These businesses will continue to be at a disadvantage unless government and banks set aside funds and technical assistance for historically underbanked communities and businesses to access.”
– WHEDco
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3. Leverage CDFIs and other community networks to reach in-need businesses.
Congress’ latest relief package would set aside $60 billion for community banks, credit unions, and CDFIs (nonprofits lenders that exclusively serve low-income, underbanked communities). Cities can make an even greater impact, our collaborators say, by recapitalizing CDFIs and partnering with other community nonprofits and faith-based organizations to reach businesses in greatest need.
“CDFIs have the staff, technology, network, trust, and track record to serve the businesses in greatest need. The fastest way to unleash our potential is to untether us from the immediate need to raise capital. By providing capital or taking a loss position, cities could allow us to serve thousands more businesses – our average small loan is $12,000. It’s not a lot of capital, and it’s easy for the city to assess who performs well: they can track our loss rates over time and judge us on our merits.”
– Accion East
“Even when they’re allowed to reopen, businesses will need significant support to refinance debt, negotiate rent relief, file insurance claims, deal with suppliers, and navigate countless other choices. Our staff is only 25 people. How can we enlist and train CPAs, translators, and other professionals to meet the volume of need?”
– Asian American for Equality
“We need additional financial assistance from government and the private sector in the form of zero-interest loans and grants to help small businesses get back on their feet. Key to the success of these initiatives will be a dedicated fund for CDFIs and LDCs across the city so we can target businesses in low- and moderate income neighborhoods who may have not the same access to credit with traditional lenders. With additional resources, LDCs such as us can partner with CDFIs to provide one-on-one technical assistance directly to our local merchants and business owners in accessing these critical resources before funds run out.”
– Downtown Brooklyn Partnership
“In cities or areas that don’t have a fully developed CDFI ecosystem, deploying resources efficiently will require organizations that have close relationships with area businesses, such as neighborhood social service agencies and faith-based organizations. This is particularly true for the communities that are most in need and don’t have established relationships with financial institutions. Getting resources to businesses quickly may mean creating a more streamlined, flexible flow of funds, so that organizations that are best positioned to scale are aware of, and can access, federal and local resources.”
– Houston Land Bank
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4. Ensure a safe and welcoming return to Main Streets.
Many expect the recovery will be gradual and, at least until there is a vaccine, episodic. In that context, reassuring people that patronage of Main Street businesses is safe will be critical. Our interviewees suggested that public funds be used to activate the public realm in business corridors.
“As the city’s recovery centers on our ability to make our streets and gathering places feel safe and vibrant to workers, residents, and businesses, the public realm is now more important than ever. The City, with the assistance of the state and federal government, needs to invest in upgrades to our public realm infrastructure to further enliven our streets and stimulate our economy. Tactical, flexible shared street and plaza improvements would create more space for people and encourage social distancing. More permanent green infrastructure and curb-less streets would offer respite for workers and residents in high-density business centers like Downtown Brooklyn. BIDs are uniquely positioned to partner with the City and State on creative financing solutions and to pilot new design solutions that enhance pedestrian safety, sustainability, and new technologies.”– Downtown Brooklyn Partnership
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5. Streamline city regulations to support existing and new businesses.
One of the 10 Guiding Principles to a Just & Resilient Recovery argued that local government must remove barriers to recovery embedded in regulatory functions especially for small businesses that are more likely to employ lower-income, less-skilled workers. Leadership of front line organizations agreed.
“Businesses face many of the same regulatory and permitting challenges today that they always face, but in light of the current crisis, relief is even more urgently-needed to streamline government processes and lower barriers to entry for businesses seeking stability and support. Expensive, lengthy, and complex review and permitting processes hinder businesses ability to be nimble and adapt to the current environment, which may be the difference between surviving this crisis versus not and will have a big impact on how quickly our city can recover.”
– Central City Association of Los Angeles
“One big difference that cities can make with no new money is through procurement. Buildings and schools need to be disinfected and cleaned, for example – if cities set aside some portion of this work for small businesses, you’d help these businesses build up their reserves and diversify their income during downturns. Making it easier for small businesses to compete for city contracts would also encourage more minority- and women-owned businesses to get certified.”
– Accion East
“We have to work with cities to consider how we adapt policy, at least in the near term. With the expected spike in vacancy, there is a need to fill vacant storefronts quickly. In Washington, DC, it can take up to a year and a half to receive all required approvals and permits to open a business. If we want to support new business creation and bring activity back to the streets as quickly as possible, a key part will be expediting permitting or allowing a business to operate temporarily while attaining approvals.”
– Joe Sternlieb, Georgetown BID
“Neighborhood business organizations are best positioned to monitor the challenges businesses have encountered as they navigate the web of government regulations, assistance, and recovery issues, and assist in troubleshooting and sharing creative solutions. NYC should appoint leaders in this network to advise the Mayor and Council on the citywide plan for recovery, in addition to key leaders in industry.”
– Downtown Brooklyn Partnership
HR&A is grateful to the 10 collaborating organizations whose insights shaped 5 Priorities from the Front Lines and whose daily work is helping to secure and rebuild communities across the country. They are:
Accion East (Paul Quinteros): Part of a nationwide network of lenders, Accion East offers affordable business loans, complemented by in-depth guidance, coaching, and a support system of peers, mentors, and resources. Accion serves more than 8,500 business and invests more than $10 million annually through its CDFI.
Asian Americans for Equality (Jennifer Sun): Based in New York, AAFE is a non-profit organization dedicated to enriching the lives of Asian Americans and all of those in need. It is a preeminent housing, social service, and community development organization. Its affiliate, Renaissance Economic Development Corporation, is a CDFI.
Central City Association of Los Angeles (Jessica Lall): The premier advocacy organization focused on setting the vision for the future of Downtown Los Angeles, CCA represents the interests of 400 businesses, trade associations, and nonprofits from a broad range of industries that collectively employ more than 350,000 people in the county.
Downtown Brooklyn Partnership (Regina Myer and May Yu): DBP is a not-for-profit local development corporation that serves as the primary champion for Downtown Brooklyn as a world-class business, cultural, educational, residential, and retail destination. It manages three BIDs: the MetroTech BID, Fulton Mall Improvement Association, and Court-Livingston-Schermerhorn BID.
Downtown Vision, Inc.: The stewards of Downtown Jacksonville, Florida, Downtown Vision serves as place managers, connectors, strategists, and activators, dedicated to improving the heart of our city for its 5,800 residents, 55,000 employees, and 11 million annual visitors discovering Downtown’s attractions, natural amenities, restaurants and retail.
Georgetown Business Improvement District (Joe Sternlieb): The Georgetown BID is dedicated to protecting and enhancing the accessibility, attractiveness, and appeal of the Georgetown commercial district in Washington, D.C.
Houston Land Bank (Anne Gatling Haynes): Houston Land Bank’s mission is to strategically acquire, dispose of, and steward vacant, abandoned, and damaged properties, into productive use and to catalyze community and economic development for the City of Houston. Its work focuses on improving quality of life for Houston’s historically underserved communities.
Rochester Downtown Alliance(Holly Masek): The Rochester Downtown Alliance is a Minnesota nonprofit working to build a vibrant Downtown community through a series of special events, activities, and initiatives in collaboration with property owners, business leaders, the City, and others with a direct stake in enhanced business and economic development conditions in the Downtown.
Street Vendor Project: The Street Vendor Project is a membership-based project in New York City with more than 1,800 active vendor members who are working together to create a vendors’ movement for permanent change. It advocates for New York’s more than 10,000 street vendors, providing training, education on legal rights, and policy advocacy.
Women’s Housing and Economic Development Corporation (WHEDco) (Davon Russell and Kerry McLean): WHEDco is a community development organization in the Bronx, NY, that builds award-winning, sustainable, affordable homes and helps build strong communities, including through commercial revitalization and entrepreneurship programs.