So much goes into the relationship between small businesses and the nonprofit business development organizations (BDOs) that are dedicated to supporting them and helping them grow. The three BDOs profiled here, longtime LISC partners, have gone above and beyond to help entrepreneurs survive the COVID-19 pandemic. They know that the wellbeing of small businesses means jobs preserved, goods and services are accessible to the community, and local economies have a better chance of weathering the pandemic-borne recession.
“Great at What They Do”: Fostering Fair Access to Business Lifelines in the Valley of the Sun
Small businesses create the texture and flavor of life along the light rail line that passes from Phoenix through the neighboring cities of Tempe and Mesa in Arizona’s Valley of the Sun. To the east of downtown Mesa, with its eclectic shops and eateries, is a district of Latinx businesses, and to the west a concentration of Asian stores and food spots. On Apache Boulevard in Tempe there's an array of Middle Eastern grocers, bakeries, and restaurants.
These mom-and-pops—and along with them the distinctive urban villages they enliven—face a potentially devastating threat in the COVID-19 pandemic. For many, help has come in the form of a nimble little organization called RAIL (that’s for rail, arts, innovation, and livability) Community Development Corporation.
By midsummer 2020, just a few months into the pandemic, RAIL had provided technical assistance to more than 200 local businesses, the vast majority owned by people of color. With RAIL’s help these hard-put small-business proprietors of Mesa and Tempe had jumped through the various hoops required to access some $2.4 million in public funds—relief money that, perversely, flows more readily to bigger, richer companies well-served by banks, accountants, and lawyers.
RAIL is a decidedly place-based business development organization, and that feeds its core strength: “We are one of the only groups that does old-school door knocking, face to face, wearing your shoes out,” says Ryan Winkle, RAIL co-founder and board chair. RAIL’s first full-time employee, Executive Director Laura Suarez (now a program director at Prestamos CDFI), had been in the position just five months when COVID-related business restrictions began in March 2020. But she worked hand in hand with longtime consultant Augie Gastelum and board members like Winkle. “All of them love their city, know the light rail corridors, and are very involved,” says Suarez.
Making connections to meet a crisis
Early in the pandemic, a grant from U.S. Bank Foundation via LISC seeded RAIL’s effort, providing $20,000 to augment organizational capacity and $40,000 for dispersal as small grants to businesses in Tempe and Mesa. Also via LISC, Bell Bank contacted RAIL for help distributing federal Paycheck Protection Program (PPP) forgivable loans to underserved businesses in need. And when the City of Mesa, using funds made available by the CARES Act, started a program providing three months’ utilities and rent to businesses suffering COVID-related losses, says Suarez, “we called the city and said we would love to help, we want to reach out to places we know are not being reached.”
RAIL folks pounded the pavement, encouraging business owners to go after these and other resources, then coached them through arduous applications. Language was a barrier for many. Businesses that had been established for years and are “great at what they do,” says Suarez, didn’t have systems in place to spit out ownership documents, financial statements, and payroll figures, or to arrange for electronic deposits when a grant came through. Gastelum worked over a weekend with local CPAs to help nine businesses complete required tax filings.
In the meantime RAIL has also been helping business owners troubleshoot life during the pandemic in ways that can pay dividends for years to come. A shawarma place in Tempe saw its customer base—“my kids,” as owner Malki De Silva puts it—shrink dramatically when students from nearby Arizona State University left campus; it got help (and a U.S. Bank Foundation grant) to expand its online marketing and cover some rent. A purveyor of Central American groceries and goodies received assistance pushing out products and limiting inventory to stay afloat. Others got a hand navigating the permitting process for outdoor patio space.
What’s past is prologue
RAIL’s readiness to hit the ground running when COVID emerged reflects a decade of legwork and investment. With the light rail’s extension into downtown Mesa imminent in 2012, LISC Phoenix, working with partners, launched a multi-million-dollar program of equitable transit-oriented development along the corridor, as well as mural painting, musical events, and other creative placemaking projects to activate the corridor and stem business losses during construction. RAIL was born in 2012 to invite diverse local voices into the process, with Winkle as lead organizer. “For years,” Winkle recalls, “it was literally me, walking in and out of businesses saying, ‘Hey, how’s business today? What are you missing?’” He’d refer their needs to Gastelum or another local expert for specific assistance.
The overall goal, substantially met, was to ensure the new light rail wouldn’t plow under the existing community of ethnically diverse businesses as so many transit projects have done in the past, but instead bring revitalization and new opportunity. Not incidentally, its years of organizing also built the capacity of RAIL itself, growing an on-the-ground organization equipped to sustain and enrich the local business ecosystem in the even more dire situation of mass contagion.
Something special on Main Street
With the group’s help one business, a Venezuelan food enterprise called Que Chevere, even managed to launch a bricks-and-mortar restaurant in downtown Mesa—in the very midst of a broiling Arizona summer marked by pandemic.
Husband-and-wife team Maria Fernanda and Orvid Cutler had run a successful food truck for four years, and Fernanda, the more conservative of the two, had finally quit her day job to go all-in on offering the authentic Venezuelan recipes she’s learned from her mother and grandmother to the people of Mesa and beyond. But in May 2020 Cutler came down with COVID and Fernanda was worried. Their business account was dwindling fast, the food truck’s corporate lunchtime traffic at a drastic ebb. “What are we going to do?” she asked her husband.
“Augie [Gastelum],” says Cutler, “has helped us out every time.” RAIL walked the couple through successful applications for a PPP loan, so they could pay four new hires to work the restaurant they opened in June 2020, and for a $20,000 Lowe’s grant through LISC, which they put toward a fenced-in outdoor space with shade and misters to freshen diners in Arizona’s 100-plus-degree summer heat.
“We’re never going to get rich doing this, but I absolutely love it," says Cutler. "The community is amazing. And I love my wife’s food. I’ve told her it’s special. It’s truly something special.”
“We Don’t Really Bust”: Strengthening Small Business for a More Stable Rural Economy
When restaurants and universities closed due to COVID-19 in March 2020, the market for many small food producers in rural western Massachusetts shifted overnight. Caroline Pam and Tim Wilcox, proprietors of Kitchen Garden Farm, had been growing organic vegetables in Sunderland, MA, for 15 years. The couple quickly reached out to a handful of other local producers—“our closest Sunderland farmer friends,” Pam says. Together they came up with an ingenious solution.
Over the grinding months of the pandemic the Sunderland Farm Collaborative has provided an online retail sales platform for some 60 local farmers and other small food businesses, helping them replace and even boost demand for their products. And it has created a way for local folks to order farm-fresh local products from raw honey to soppressata made of pastured pork to Kitchen Garden’s own spicy mixed greens or rainbow carrots—and have them collected in a single package for pickup or delivery to their doorstep.
Born of necessity, the collective is a winning innovation that’s likely to continue long after the epidemic (knock wood) is put to rest.
A long-term project to incubate small enterprise
Franklin County Community Development Corporation (FCCDC) properly belongs in the background of the farm collective’s story. This business development organization serving a broad swath of northwestern Massachusetts has assisted a few of the collaborative’s small businesses with affordable loans, others with access to its Western Massachusetts Food Processing Center, where they can develop and churn out value-added products. For Kitchen Garden Farm the commercial kitchen was an important stepping stone on the way to building its own facility; the farm used FCCDC’s space for five years to ramp up production of its piquant, award-winning srirachas and salsas, which now make up nearly half its revenues.
All this provides an illustration of FCCDC’s founding impetus 40 years ago: to put local people in charge of their own economic destiny. In those days a large paper mill or machine shop could deal a staggering blow to the county’s rural way of life by pulling up stakes and taking a thousand jobs with it. A more diverse economy of homegrown small businesses, from retail to manufacturing to small farms, would be more resilient, the CDC’s founders thought.
So they went about building it, cultivating small enterprise across rural western Massachusetts by providing training and advice, capital, and room to work, whether in the CDC’s food processing plant or its Venture Center, an incubator space for office and light-industrial businesses.
Today, says longtime FCCDC executive director John Waite, local people have more choice—“a lot of different places to work, a lot of different places to shop or get services.” And that makes for a more stable, if not high-flying, economy. “We always say when there’s a boom we don’t necessarily boom, but when there’s a bust we don’t really bust either,” says Waite. “Maybe a couple businesses have trouble and they lay off a few people. But other businesses do okay.”
Holding the center in trying times
At the outset of the COVID-19 crisis—a global bust of unprecedented nature—the CDC swung into action to blunt its impact on local businesses that might be struggling. It shifted its focus from issuing new loans for startups to offering interest-only payments or deferments to existing borrowers. It reduced rent for tenants of its incubator space. CDC leaders worked with local banks to connect businesses in need with Paycheck Protection Program forgivable loans. And the U.S. Economic Development Administration (EDA), noting the CDC’s 25 years successfully managing an EDA revolving loan fund, recapitalized that fund to the tune of $730,000—flexible, affordable money the CDC is putting out to aid small businesses in their bid for survival and recovery.
Early in the pandemic the CDC worked with four local towns to rejigger use of their existing Community Development Block Grant (CDBG) funds, converting a loan program to small grants more suited to the emergency. When the federal CARES Act came through with more CDBG funds, Franklin County CDC took on the work of dispersing some $600,000 in small grants to businesses across 23 towns that have fewer than five employees and are owned by people with low or moderate incomes.
“Those businesses that really need five or ten thousand dollars, they’re so overwhelmed,” says Waite. “They’ve had to lay off people, or they’re looking for another job. And so they don’t have time for this. We can ask the direct questions and help them with the application.” That makes a good segue into more forward-looking conversations about how each proprietor can strengthen her enterprise over the long run.
This response puts extra demand on the CDC—requires time, effort, and money. A few of the organization’s funders stepped up with dollars to enable that critical work. Rural LISC, a partner and supporter of the CDC for more than 20 years, was in conversation with Waite early on, issuing a supplementary $25,000 Sam’s Club grant. “We know them, we know the work that they do,” says Julia Malinowski, program director at Rural LISC. “They’ve taken a real leadership role, helping coordinate resources and share information, helping hold the center for the ecosystem.”
What’s gratifying to Waite, two decades in the job, are the ways that ecosystem has held up under the stress test of COVID. “We don’t want to do everything,” he says. “We want to help entrepreneurs and put them in a position where they’re stronger, to do it themselves.”
A “Black Mecca”: Tackling Atlanta’s Racial Wealth Gap by Supporting Black Entrepreneurs
Today’s Atlanta surely hints at the promised land its native son Martin Luther King Jr. talked about more than half a century ago. Capital of the so-called New South, Atlanta is a majority-Black global city, widely celebrated as a font of Black talent and achievement in the realms of higher education and business, culture and politics.
But here as elsewhere in America, Dr. King’s dream of economic justice is a dream deferred—still. The typical white family in Atlanta has a household income topping $83,000; Black households take in a median $28,000. More than a third of the city’s Black households have zero net worth—nothing to fall back on in emergencies or invest for the future—versus only 16 percent of white households.
“The great thing about Atlanta is it wants to be known as the Black Mecca,” observes Latresa McLawhorn Ryan, executive director of the Atlanta Wealth Building Initiative (AWBI). “But Atlanta is number one in income inequality, and a child that’s born into poverty has just a 4 percent chance of escaping it.”
AWBI’s purpose is to shed light on the systemic inequities that lead to such grossly unfair outcomes—and to lead an all-hands-on-deck effort to finally redress them, with a focus on Black entrepreneurship as a resource-starved but powerful engine of opportunity.
A thousand onramps to African-American prosperity
This mission emerged from a community of practice convened over six months in 2017 and led by The Kendeda Fund, the Annie E. Casey Foundation Atlanta Civic Site, and Prosperity Now. In a report Prosperity Now laid out the troubling figures cited above and identified the specific goal of equipping a thousand Black-owned Atlanta businesses, 96 percent of which are sole proprietorships, with the tools to hire an employee and pay a living wage. Since Black entrepreneurs are more likely to hire other people of color and to give back to their communities as mentors and donors, the report said, “entrepreneurship presents an onramp to collective prosperity that goes beyond the immediate gain of an individual business owner.”
Now encompassing more than 40 local nonprofits and municipal agencies in its "community of practice", AWBI’s role is that of advocate and coordinator. “We bring in national and international best practices, share them widely, then make strategic investments through our grant making focused on capacity building for nonprofits as well as designing and supporting prototypes,” explains McLawhorn Ryan.
In coming months and years, AWBI investments and advocacy in its “1,000 Businesses in 1,000 Days” campaign will concentrate in three areas:
- encouraging Atlanta’s anchor institutions—universities, medical centers, financial institutions, and Fortune 500 companies—to be mindfully inclusive in their contracting and procurement, and connecting Black-owned enterprises with the technical capacity and social capital needed to land that business;
- seeding neighborhood-based workforce development efforts, so residents can benefit from job opportunities in their communities; and
- fighting loss and displacement of Black-owned businesses due to development and gentrification, through such activities as business succession and estate planning, building worker-owned cooperatives, and exploring zoning and land acquisition practices that preserve affordable space to live and do business.
LISC Atlanta contributed $32,500 in grants from Lowe's and Procter & Gamble to bolster AWBI’s work. “AWBI is one of the few business development groups to focus on equity in a very explicit way,” says Amit Khanduri, program officer for equitable community development at LISC Atlanta.
In the meantime, COVID
Jeanna Bailey’s business, floral matters, is just the kind that feeds Atlanta’s reputation as a Black Mecca. She started the floral shop with a friend after being laid off from the company where she’d worked ten years; it was 2009, the height of a recession, and she’d just purchased a home. Over the last decade Bailey has built the shop into a going concern employing a handful of contractors as well as a few full-time staff (including operations manager Gretchen Satcher, a friend and former Spelman College classmate). Bailey’s own long and varied experience as a floral designer working for others, she says, “really taught me to treat employees and freelancers well and always pay them a living wage.”
Before COVID hit, the floral shop did a brisk business from the lobby of a swank office tower in Midtown Atlanta, with clients in the corporate, hotel, and academic sectors that routinely ordered up dozens of centerpieces for events. But the pandemic year of 2020 has found Bailey driving the spread-out neighborhoods of Atlanta making her own deliveries, she and Satcher scrambling for new marketing opportunities and resources to plug revenue gaps.
One of those resources came as a $10,000 loan from AWBI. Early in the pandemic, recognizing that many of the Black-owned businesses it seeks to nourish and build had only a few weeks’ financial cushion, AWBI rushed to develop a grant and loan program to help them over the breach. This financial help also comes with technical assistance.
The loan program, administered by LISC Atlanta and geared toward relatively established businesses with between $100,000 and $1.5 million in annual revenue, is designed to be flexible and ultimately forgivable. Those who are able to pay it back can build business credit. And in the spirit of the African savings club known as the sou-sou, they’ll be paying it forward to other Black-owned businesses that can benefit from the revolving funds in the future, says McLawhorn Ryan.
In laying bare inequities that have disadvantaged Black Americans for many generations, the pandemic has also made clear just how urgent AWBI’s efforts are to actively bend the long arc of the moral universe, to crib from MLK’s famous words, toward justice. Are Atlantans hearing that call? “Oh absolutely,” says McLawhorn Ryan. “Emphatically.”