The moment that Governor Baker and governors across the country announced health emergencies in March that required most businesses to close, it was clear that micro- and small-businesses would be particularly vulnerable to long term-financial harm. We also knew that it would hit particularly hard on businesses owned by Black people, immigrants, people of color, and other historically disadvantaged communities that have less accumulated wealth, smaller margins, and often have customers who are the hardest hit by the COVID-19 pandemic.
To mitigate the harm, MACDC immediately issued a call on March 23 for a $150 million Small Business Relief and Recovery package that included a request for $30 million in grants for small businesses. A few weeks later on April 22, a coalition of 79 community organizations issued the same set of policy recommendations as we began to see that the federal Payroll Protection Program (PPP) – enacted by Congress in late March – was not going to serve many of the businesses in our communities.
The need for such grant funding has become increasingly clear as the Program has been implemented and the economic crisis has deepened and lengthened. It is now abundantly clear that the economic recovery will be long and slow and that most small businesses simply cannot take on more debt. These businesses were impacted by the government’s appropriate need to protect the entire community from the virus – and we believe the entire community has an obligation to help these business owners survive.
Thankfully, after four months of advocacy, we are beginning to see grant funding rolled out to small businesses across the state. In the first few months, it was mostly cities creating grant programs with federal CDBG dollars provided by Congress as part of the CARES Act. Boston, Worcester, Springfield, Northampton, Cambridge and many other cities rolled out programs, generally aimed at businesses with 5 or fewer employees. These grant programs provided critical operating capital and funds to buy Personal Protective Equipment (PPE); however, in virtually every case the programs were overwhelmed with applications.
Last week, Governor Baker announced $19.6 million in CDBG funding for non-entitlement communities (i.e. smaller towns and cities that don’t get their own CDBG) with most of it allocated for grants to micro businesses. Many CDCs are expected to play a central role in this micro-enterprise grant programs by providing outreach, intake, technical assistance and in some cases direct administration of the programs. Franklin County CDC, Hilltown CDC, Community Development Partnership on Cape Cod, New Vue Communities and Quaboag Valley CDC are among the CDCs expected to play such roles.
The State Legislature has also begun to respond to our calls for small business support with $10 million included in the recently passed supplemental budget. The bill is now on the Governor’s desk for his signature. These funds will be administered by the Massachusetts Growth Capital Corporation (MGCC) and serve businesses with up to 50 employees who have been unable to access PPP or other federal programs.
MACDC and its coalition partners are also advocating for Governor Baker’s economic development legislation, which would authorize an additional $15 million in grant funding for micro businesses and $35 million of grant funds for Community Development Financial Institutions (CDFIs) and CDCs that make low-cost loans to small businesses (a second element of our policy proposals from March). This bill is pending in the Legislature and is expected to pass before July 31. While we are thrilled at the prospect of $50 million in authorization for new bonds to support small businesses, the critical question will be how quickly Governor Baker disperses these funds. Under Massachusetts law, the Governor has sole authority for allocating such bond authorizations on an annual basis, and this bill has been deemed a five-year bond bill. Spending these dollars over a five-year period would not provide the boost we need now as business owners fight to survive.
Finally, MACDC and its partners are advocating that Governor Baker use a significant portion of the $26 million in federal round 2 CDBG funding that is also available to deal with the economic crisis.
In total, we expect state and local governments to deploy well in excess of $30 million for small business grants by the end of 2020. At the same time, the economic crisis is likely to be much worse that we realized back in March and April. This recovery process is going to take longer and the impact on small businesses is going to be even more severe, so we will need substantially more funding at the local, state, and federal level in the weeks and months to come. MACDC and its partners will continue to press our case.