Short-term planning: ensuring an inclusive recovery

For cities that have not already convened a multi-sector set of partners to identify and address the needs of immigrant and refugee communities as part of their overall COVID-19 response and recovery planning, the first step should be to bring the right set of partners to the table.

This effort should be:

• Multi-sector: This group must include representation from local government, as well as organizations that serve immigrants and refugees, such as refugee resettlement organizations, local Offices of Immigrant Affairs, and other community-based organizations; and may also include chambers of commerce; universities; private corporations, community foundations, and financial institutions; and faith-based organizations.
• Data-driven: Cities should make use of existing metro-level research on immigrants and refugees (e.g., New American Economy’s Map the Impact which provides metro-level economic and demographic data about immigration), as well as local surveys of immigrant and refugee business owners. Cities should collect data on country of origin and/or language requests as part of service delivery (e.g., through small business relief funds), taking care to not include questions about immigration status or keeping such information confidential, if it is necessary to collect.
• Empowered to make and implement recommendations: Recommendations made by this group should be advanced as part of the city’s overall response, adaptation and recovery effort, including policy change and the development of new targeted programming.
• Locally and/or privately funded: Due to federal funding restrictions, immigrants — especially undocumented immigrants — may be left out of COVID-19 relief funds and other forms of federal aid, assistance or benefits. Unrestricted local public dollars or private funding should be tapped to ensure that all small business owners, regardless of immigration status, are able to access the necessary support and resources.

Action:

Work with partners to create and expand free mentorship programs for MWBEs.

Why:

An estimated 81% of funding for businesses comes through personal net worth, family wealth, or connections to networks. The lack of business role models is particularly acute for Black and brown business owners, impeding their ability to start businesses. Mentorship programs are an integral part of an entrepreneurial ecosystem and are a low-cost and powerful strategy to support MWBEs.

How to Adapt This Approach:

• Work with partners (e.g., local/ethnic chambers, technical assistance providers, merchant groups) to assess the mentorship needs of local businesses, particularly MWBEs. Conduct a survey, hold focus groups and interviews with entrepreneurs to identify gaps and existing resources
• Identify existing providers of free or low-cost mentorship services in the city or region
  – Determine if they can scale their existing programming to address the service gaps identified in the needs assessment
  – Ensure programming is designed to support MWBEs
  – Work with philanthropic and corporate partners to fund the expansion of programming at the existing partner
• If a local partner is not able to meet this need, work with national organizations, such as Start Small Think Big, to connect their services to MWBEs in your city. Again, work with philanthropic and corporate partners to fund this expansion of services
• Integrate service into business support system (Action 2A) to align with other services, coordinate on referrals, and track client experience
• Launch program with active outreach and media campaigns. Leverage partners in the community to reach business owners (e.g., merchant associations, local/ethnic chambers, community groups, etc.)
• Measure and publish KPIs on a regular basis. Include aggregated demographic and neighborhood data on entrepreneurs being served, services provided, outcomes, etc. (See KPIs section)

Action:

Work with nonprofit, academic, philanthropic and business partners to create and grow an entrepreneurial ecosystem tailored for underserved small businesses.

How to Adapt This Approach:

• Identify a lead for the initiative
  •  In most cases, a non-City organization (nonprofit, chamber, philanthropy, academic, etc.) is best positioned to house initiative
  • The individual leading the initiative should have extensive private sector experience, have credibility within the community of entrepreneurs where the initiative is focused, and preferably be an entrepreneur as well
  •  Cities should leverage their convening power to galvanize partners, support fundraising, and focus on City controlled areas where it can accelerate or remove barriers to entrepreneurship
• The lead organization should engage and assess the current ecosystem
  • Reach out to local business leaders and entrepreneurs to identify gaps in existing programming and opportunities
  • Outreach to communities of color and low-income individuals to understand the needs of all communities
  • Connect with startup and small business groups, local nonprofits, educational institutions, philanthropic partners, and business leaders to ensure participation. Part of the program’s benefit should be to offer networking and mentoring opportunities with established leaders
  • Use data (e.g., from Kauffman foundation’s My Sidewalk) to demonstrate where potential gaps and opportunities for entrepreneurship exist in the community
• The lead organization should build a coalition of partners to support the initiative, which could include education institutions, VCs, successful founders, corporate partners, and service providers (e.g., lawyers, bankers, accountants, real estate technical assistance providers). Ensure partners are representative of the community the initiative intends to focus on
• Work with the coalition of partners to develop a proposed initiative to build out the entrepreneurial ecosystem in the city. The initiative could include:
  • A physical center like RCIE, which focuses on providing all the support needed for a specific community of entrepreneurs
  •  An initiative to join up a network of existing coworking spaces, accelerators, entrepreneurship programs, events, etc. and connect it to MWBE or LMI entrepreneurs
  • The designation of an entrepreneurial ambassador who serves as a single point of contact to navigate and connect entrepreneurs to the ecosystemThe proposal will vary depending on the project but should include: the goal, the need/ opportunity, the coalition of partners, the program design, location, staffing, budget, metrics, and timeline/next steps
• Use the proposal to raise funds for the initiative. Pitch foundations, banks, and corporations on contributing financially, providing in-kind support, or advising the program. Start with the coalition partners who have helped develop the initiative
• Launch and implement initiative
• Track and publish KPIs on a regular basis. Include aggregated demographic and neighborhood data on entrepreneurs being served, services provided, outcomes, etc. (See KPIs section)

Problem:

The availability of funds is not enough to ensure the success of local businesses. In fact, funds without support and technical assistance can create problems for businesses. But technical assistance programs are not enough; the success of entrepreneurs depends on having a strong community of mentors that they can rely on to help them along the process of starting and scaling a business — whether it be answering questions about business planning and strategy advice, partners, the local market, funding /grants, or even getting advice on who to go to.

This ecosystem must be diverse and available to all in the community. An estimated 81 percent of funding for businesses comes through personal net worth, family wealth, or connections to networks. The lack of business role models is particularly acute for Black and brown business owners, impeding their ability to start businesses. Ensuring that these individuals have an entrepreneurial ecosystem is critical to ensuring equity in a city.

Action:

Cities should launch programs, leveraging business and community partners, to foster an entrepreneurial environment. These actions should focus around connecting entrepreneurs and facilitating access to government and support services, such as mentoring. They usually should not be led by the city, but the city has a key role to play encouraging, galvanizing, connecting, and facilitating. These actions are also incredibly important, are foundational to ensure the success of other programs in this toolkit, and are low-cost.

Action:

Use land powers and incentives to support inclusive development projects, which convert abandoned or vacant buildings in disinvested neighborhoods. Promote the projects to philanthropic, corporate, or other government funders.

Background

Immigrants are roughly twice as likely as the U.S.-born to start small businesses, but they have trouble accessing the necessary capital to grow and are more likely to stay small or fail earlier as a result.

Issues such as poor or limited credit history, lack of financial literacy, and lack of familiarity with and access to mainstream financial services create unique hurdles for immigrant and refugee entrepreneurs.

Strategies:

A. Leverage the expertise of CDFIs and CDCUs with experience serving immigrant and refugee communities. Organizations that offer lending or micro-lending services to low- to moderate-income borrowers from diverse backgrounds are more likely to provide flexible, low-interest products that meet the needs of immigrant and refugee entrepreneurs. These organizations should be equipped with the staff and resources to provide linguistically and culturally competent services. For example, Inclusiv, which is a national network of credit unions, recently launched the Inclusiv Resilience Fund, which is “an opportunity for minority designated credit unions to receive funding to expand the scope and reach of their financial programs and services for the benefit of the people and communities they serve.”

B. Create a technical assistance network to help business owners navigate the process. Mainstream lending institutions may lack the expertise to provide linguistically and culturally competent services to immigrant and refugee business owners, and may also lack the flexibility to provide products that meet the particular needs of these communities. At the same time, foreign-born and other underserved entrepreneurs may have difficulty navigating the process of applying for small business loans and grants, including through recent relief packages. A technical assistance network that brings together business development organizations, lenders and organizations that serve the target population can help collectively address these challenges.

For example:
The City of Baltimore and the Baltimore Development Corporation have created a TA network with the Baltimore Small Business Support Fund to help immigrant, minority and women-owned businesses access COVID-19 relief and other forms of capital and investment.

C. Support the creation of specialized lending models. Certain lending models and products have emerged in recent years that are designed to serve specific community interests and needs. For example, some faith-based communities — including Muslims as well as some Jewish and Christian groups — are prohibited from paying or receiving interest on financial transactions, which means they may not use most mainstream financial services in the U.S. The Neighborhood Development Center in Minneapolis, MN now provides Islamic financing for small businesses to Muslims and non-Muslims, through an arrangement where no interest is charged. Other models, like the San Francisco-based Mission Asset Fund’s lending circles, allow communities to pool money to invest collectively in a business.

Action:

Lead the way in aligning small business services into a more unified, client-centered, data-driven business support system with a focus on MWBEs and LMI small businesses. The system should have a consolidated point of entry for small businesses support to triage, navigate, and refer entrepreneurs to the city’s broader business support network.

How to Adapt This Approach:

• Assess the effectiveness of the current small business support system
  – Reach out to a diverse set of small businesses, business groups and local stakeholders through one-on-one interviews, focus groups and surveys. Be sure to engage communities of color and LMI businesses to understand the specific needs of their communities
  – Evaluate reporting and outcome data from business support providers and any City run programs. Review the profile of which business (e.g., sector, size, business type, ownership profile, neighborhoods, etc.) are receiving the most and least amount of services and how effective those services have been
• Build a coalition of business support providers (e.g., nonprofits, academic, other government agencies, etc.) to review findings of the assessment, agree on shared goals for aligning the system and develop a project plan to advance these goals
• Develop a comprehensive map of the small business support services available in the city.
  – Take a client centric approach to identify missing services, determine gaps in the system where entrepreneurs get stuck or fall through the cracks, and assess which services are most and least effective
  – Consider language access, cultural competency, outreach/proximity to high need communities and other factors when evaluating existing services
• Working through the coalition of business support providers, develop an implementation plan with specific actions to create a more unified system. These actions could include:
  – Establish one support provider or City agency to serve as the primary point of entry for small business services— triaging, navigating, and case managing the small business through the business support system
  – Draw on the comprehensive service map to create a consolidated business portal designed for small business clients to quickly understand, navigate and access business services
  – Agree to a uniform set of KPIs. Develop a unified data system/client relationship management (CRM) tool to track a business clients experience across the business support system and measure impact
  – Create a “community of practice” with regular meetings so providers can coordinate on cases, share best practices/challenges, conduct trainings and coordinate on the delivery of the implementation plan
  – Develop new programming to address gaps in services. Cities could fund these services directly or advocate for philanthropic, corporate or other governmental funding sources.
  – If the City is contracting for business support services with nonprofit providers, include as part of the contract requirements to coordinate on the above elements
• Partner with merchant associations, local/ethnic chambers, and other community groups, which are trusted partners in the communities, to drive outreach, promote and connect harder-to-reach businesses to business support
• Track and publish KPIs on a regular basis. Include aggregated demographic and neighborhood data on businesses being served, services provided, outcomes, etc. across the entire system. (See KPIs section)

Action:

Municipalities should pursue HUD funding and specifically section 108 loan guarantees of the Community Development Block Grant program, to help offset project costs.

Case Study

Salem, OR – Salem Convention Center

The city wanted to build a new convention center to support economic growth in the downtown area. The cost was going to be $31.8m and the city faced a funding shortfall.

The city recognized that a combination of TIF and private funding were not going to be sufficient to fund the development. So it applied for $7.9m of section 108 guaranteed loan funds. These were awarded on the basis of existing financial commitments, an assessment of the project’s feasibility, and (critically) the commitment to create 37 full-time jobs, including 20 jobs for low-and moderate-income residents.

A project was structured as follows:

• VIP’s Motor Inns (a private company) purchased the downtown lot, and then approached the city’s Urban Renewal Agency about the possibility of a coordinated public-private development of a conference center and hotel.
• The private entity financed the hotel, while the public agency financed the conference center and parking garage. The city funneled its contribution through the agency.
• The site was reconfigured through a lot line adjustment so that the agency owned the conference center land (which was important for future conference center revenue and was needed to pay back the section 108 loan).

The center has since made more than $51 million net revenue, and helped to drive the revitalization of downtown.
(For more information on the CDBG Entitlement Program, click here)