In the era of COVID-19, connected ecosystems are paying off for small businesses struggling to keep their doors open. Which proves just how critical LISC’s ongoing work to build relationships that support economic development really is, in times of crisis and beyond.
(Photo above: Haven Yoga Studio in Indianapolis is part of a local small business ecosystem supported by LISC.)
At LISC, we talk a lot about the power of partnerships.
In our work supporting mom-and-pop businesses in disinvested places, for instance, we celebrate when local stakeholders—business development organizations, government entities, funders and lenders, advocacy groups—come together around the same tables and tackle projects together.
The very connectivity of these local networks is a form of capacity. It’s a force multiplier that lets small community-based organizations get very good at serving a specific constituency in particular ways, while at the same time enjoying access to broader skills sets, perspectives, and resources. These linked-up local ecosystems in turn are better able than any single organization to plug into state, regional, and national networks.
All this can seem awfully abstract. Calculating the value of relationships built is much harder than counting up dollars invested, jobs created, or square footage built. So you held meetings, swapped phone numbers; so what?
But in the Covid-19 crisis that’s hammered the nation for a year now, we’ve seen just how critical established, on-the-ground, inter-organizational connections are to getting things done—whether it’s speedily and equitably delivering vaccines from federal distribution points into people’s arms, coordinating food assistance at a time of sharply increased need, or making sure emergency rental assistance serves the poorest renters and small landlords.
Working partnerships have certainly proven key to aiding viable but vulnerable small businesses—before it’s too late.
In last spring’s rapidly depleted first round of the federal government’s Paycheck Protection Program (PPP), forgivable loans to small businesses were approved in the fifth of U.S. zip codes with the highest proportion of white residents at double the rate approved in the fifth of zip codes with the fewest white people, according to an analysis by the AP. And the Washington Post found that more than half the money distributed in rounds one and two went to just five percent of recipients, larger businesses that won high-value loans.
Those businesses that most easily navigated their way to help did so via a web of existing connections—to banks, lawyers, accountants, and technological support, for example.
LISC and its partners, on the other hand, have powerfully leveraged their own connections to bring relief to BIPOC entrepreneurs, to the very smallest businesses, and to those owned by people with low incomes.
Let’s put that in concrete terms.
In Boston, on the Thursday before the first round of PPP opened on a Monday, our colleague Karen Kelleher, executive director of LISC Boston, took part in a small gathering of dynamic leaders who knew one another—including Glynn Lloyd of the Foundation for Business Equity, Joe Kriesberg of the Massachusetts Association of Community Development Corporations, Betty Francisco of Amplify Latinx and Segun Idowu of the Black Economic Council of Massachusetts (BECMA). Their motivating thought, according to Kelleher: “We’ve got todo something to make sure PPP doesn’t fly by minority-owned businesses.”
By Monday they’d all tapped into their own networks—LISC reached out to other community development financial institutions (CDFIs) and even housing lenders willing to help provide technical assistance (TA)—and managed to recruit 40 volunteers representing organizations with complementary capabilities. They’d created a Google document to consolidate information, and LISC had pulled a staff person from another project to coordinate what would be dubbed the Massachusetts Equitable PPP Access Initiative.
Some partner organizations did the considerable work of outreach, referring businesses into the program. These small businesses were assigned first to a TA provider (the coalition’s breadth of TA partners meant there was capacity to assist in Portuguese and Spanish), then to a partner bank.
During the second round of PPP funding that began in late April, the coalition gave technical guidance to 900 business proprietors; some 400 received loans totaling about $5 million. The coalition is continuing its PPP work in the current third round of PPP funding.
In late July the Boston-based coalition used its learning and collective voice to advocate at the state level for a grant program shaped to the acute needs of small and “micro” (with no more than five employees) businesses owned by people on low and moderate incomes, especially entrepreneurs of color.
When the money came through, the state agency administering the new program asked coalition members to once again turn on a dime and reach out to business owners to help connect them with grants ASAP. In the next three weeks the partners did that hand-holding and advising for 1,100 businesses.
“The real heroes are the people who are doing the TA,” Kelleher tells us. “Those are the people who are giving up their nights, they’re giving up their weekends. They’re putting all their creativity and energy into making this happen. Because serving eleven hundred business in three weeks is crazy.”
There are many other examples where connected ecosystems, knitted together over months and years in common purpose, quickened, in the urgency of the pandemic, into juggernauts capable of accomplishing big things for small businesses in need.
In City Heights, a dazzlingly diverse immigrant neighborhood in San Diego, Maly E’k-Doungpanya has been helping small business owners overcome thorny problems for 15 years. As economic development program manager at City Heights CDC and someone who grew up in the neighborhood, she’s a trusted figure whose referrals, even before the pandemic, came largely through word-of-mouth. City Heights CDC also enjoyed strong, longstanding ties to a handful of other local organizations (including LISC San Diego) joined in the City Heights Economic Development Collaborative.
When Covid-19 struck City Heights, it was this collaborative that swung into action and raised $442,000 in private money for a business relief fund, pushing it out quickly in four rounds of small grants. “We couldn't have done that without the economic development collaborative being a 10-year-running entity that meets monthly,” reports Erik Tilkemeier, director of economic and urban development at City Heights CDC.
In standing up its own relief fund for minority-, immigrant, and women-owned businesses, LISC Indianapolis likewise turned to familiar partners that had been meeting around various projects—including a small-business ecosystem “mapping”—for years. The Indy Black Chamber of Commerce, the Hispanic Business Council, Forward Cities, the Central Indiana Community Foundation, the City of Indianapolis Office of Women and Minority Business Development, and the Kheprw Institute (a local community wealth-building organization focused on minority entrepreneurs) all put shoulder to the plow, spreading the word about the grant opportunity and, crucially, serving on a formal body that devised application review criteria, selected grantees, and helped steer those who didn’t get a grant to other resources. The panel’s diversity and experience, says LISC Indianapolis Program Officer Emily Scott, were a big plus for funders.
These successes, hard won in pandemic times, reinforce what we at LISC have long believed: Our relationships empower us to create new systems that cut against the grain of social and economic inequality. In ordinary times no less than during an unprecedented crisis, little community-based organizations can do much more for their disinvested neighborhoods or rural areas when they’re part of a robust ecosystem of like-minded folk. We must continue to prioritize collaboration. And we must find new ways to incentivize and reward its credit-sharing ethos.
ABOUT THE AUTHOR
Teresa Garcia, Program Officer, Economic Development
Teresa helps LISC partners strengthen their services to support BIPOC-owned businesses and to build inclusive small business ecosystems in communities across the country. Prior to joining LISC in 2020, Teresa worked in the private sector managing and consulting on capital projects for nonprofit clients. She also worked for the NYC Department of Small Business Services' Neighborhood Development Division managing capacity building and façade improvement programs, administering nearly $2.5 million in grants and technical assistance to community-based organizations (CBOs), small businesses and property owners in low- and moderate-income communities across the five boroughs. Teresa has a Masters in Urban Planning from Hunter College, an MA in American Studies from California State University Fullerton and a BA in Art from Concordia University Irvine.