HomeMy WebLinkAboutMemo - Mail Packet - 7/14/2020 - Memorandum From Josh Birks And Shannon Hein Re: Disadvantaged Busines Entity (Dbe) Support During Covid-19 And BeyondEconomic Health Office
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MEMORANDUM
DATE: July 9, 2020
TO: Mayor and Councilmembers
THRU: Darin Atteberry, City Manager; and
Jacqueline Kozak-Theil, Chief Sustainability Officer
FROM: Josh Birks, Economic Health and Redevelopment Director; and
Shannon Hein, Interim Economic Health Manager
RE: DISADVANTAGE BUSINESS ENTITY (DBE) SUPPORT DURING
COVID-19 & BEYOND
The purpose of this memo is to follow-up on an inquiry made by City Council during the Equity and
Inclusion update work session on May 12, 2020. The inquiry related to the challenges disadvantaged
business entities (DBEs), which include minority-, women-, low-income-, and veteran-owned
businesses, face during the COVID-19 pandemic and how the Economic Health Office (EHO) is
working to support these entities.
BOTTOM-LINE:
Small businesses and especially DBEs face great challenges to success due to the current COVID-19
pandemic. EHO, working with regional partners, has tried to target response and recovery efforts
towards DBEs. Preliminary numbers from these efforts indicate that DBEs have benefited, and yet,
many challenges remain. EHO will continue its efforts, pre-dating the pandemic and enhanced during
this time, to focus resources on support DBEs and small businesses which form the heart of our local
economy.
BACKGROUND/DISCUSSION:
In June, McKinsey & Company published an article titled Which small businesses are most vulnerable
to COVID-19 and when. The article restates a commonly accepted economic condition – small
businesses are essential to the economy. Many small businesses are owned by minorities, women,
low-income individuals, and veterans. Businesses owned by these individuals are often referred to as
Disadvantaged Business Entities (DBEs) because of the additional challenges they face.
Before the current crisis, small businesses accounted for half of all private-sector jobs nationally and
two-thirds of net new jobs created from 2000 to 2017. This makes small business an important and
large-scale economic engine – representing both community wealth and significant income to many
employees. Studies of previous recessions show that people who lost their jobs earned 17.5% less at
their new ones. Significant small business closures, therefore, means longer-lasting unemployment and
economic damage than temporary shutdowns.
To further exacerbate the situation, small businesses often are the least financially resilient – meaning
they often have limited cash assets to cover increased costs and often manage payroll on a month-to-
month basis. The potential impact on small businesses includes a less obvious impact on minorities.
Nationally, minorities own a quarter of small businesses in the most affected sectors and compared to
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just 15% of the least affected sectors. In addition, minority owned businesses are at increased risk
because they tend to have lower financial resilience.
The evidence builds a clear case for on-going interventions to provide both immediate relief and sustain
recovery through longer-term resilience for small businesses. EHO, mindful of this evidence, has
worked to target response and recovery programs, tools, and resources towards DBEs. This continues
work that EHO began in 2018/2019 as part of Council’s priority to enhance support of Small
Businesses.
OVERVIEW OF CURRENT ACTIVITIES:
To provide grounding, below is a list of activities, many of which began before the pandemic, EHO
continues to engage in to support DBEs in our local community:
Targeted Outreach – Using existing resources adapted for the Latinx community with the help
of a local cultural broker, EHO has conducted business listening sessions, collaborated with the
new bi-lingual business librarian at Poudre River Public Library, organized and conducted
business town halls simulcast in Spanish, and convened business partners to identify a potential
process to develop minority-owned business lists accessible to the public.
Supportive Services – Working with the Larimer County Small Business Development Center
(SBDC), EHO has increased outreach to Latinx business owners to market the services of the
SBDC. These services include training and free one-on-one consultation. Working with the
business librarian some of these services are now offered in Spanish. ForFortCollins.com was
launched this spring as a tool to support the business community through safety information and
marketing support. Tools in Spanish are available on the site and through the custom social
media graphics creator.
Enhance Capital Access – Many DBEs struggle to access traditional means of capital. As a
result, EHO has been mindful to target (while staying within the confines of fair lending
standards) revolving loan programs towards DBEs. Additional details on the success of these
programs can be found below.
Resource Translation – EHO has worked with internal and external partners to ensure that
resources directed towards small businesses are available in Spanish as well as English. These
include funding the translation of sales tax resources on behalf of the Finance Department,
ensuring NoCoRecovers.com and ForFortCollins.com are both available in Spanish, resources
on face covering orders including signage, and ensuring all COVID-19 resources on the City’s
business website are also available in Spanish.
Inclusive Events & Sponsorships – In 2019, EHO sponsored the Latino Northern Colorado
podcast and continued to sponsor Fort Collins Startup Week. The 2020 Fort Collins Startup
Week had a focus on inclusion and our team spearheaded this conversation and worked with
partners to ensure Spanish-speaking sessions were available, and more people of color were
represented as speakers.
Understanding Response & Recovery Need – EHO is developing an approach to learn about
DBEs experiences and how the City might support them better through interviews around facial
covering impacts to people of color, understanding what DBEs need during recovery, and how
to better engage and share out resources based on their own cultural norms and preferences.
Inclusive Storytelling – With permission of participating businesses, EHO will include stories
from DBEs as part of the ForFortCollins.com campaign. The campaign will also include the
launch of an ambassador program with an emphasis on supporting DBEs.
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CAPITAL ACCESS PROGRAM SUCCESS:
In response to the COVID-19 pandemic, EHO has created and/or supported two revolving loan
programs. Both programs include a focus on small businesses, especially those without traditional
banking relationships, which include DBEs. Below is a brief description of each program and their
current performance.
Small Business Relief and Recovery Loan Fund:
The Small Business Relief and Recovery Loan Fund launched on April 17, 2020. Colorado Lending
Source (CLS) was able to lend $130,000 to support small business recovery in Fort Collins with the City
providing $6,600 in interest rate buy downs. Within a week, Colorado Lending Source received 90
applications. Colorado Lending Source selected 13 businesses to receive $10,000 in loan support each.
Recipient Demographics:
54% owned by women
15% minority-owned
15% are manufacturers
23% owned by someone under 40 years old
Employed 103 people on February 15, 2020
Employ 75 currently – 27% decrease
Expected to employ 125 people by the end of 2020
o 21% increase from pre-COVID-19 employment level
Larimer County Small Business Relief Loan Fund:
The Small Business Recovery Loan Fund for Larimer County is a new regional initiative led by the
Bohemian Foundation, the City of Fort Collins, and the Fort Collins Area Chamber of Commerce. The
Loan Fund provides lending capital and loan guarantees to allow for low cost debt capital of between
$2,500 - $50,000 to underserved companies in Larimer County that have been negatively impacted by
the COVID-19 pandemic. Loan underwriting, loan disbursement, loan servicing and all related legal
compliance will be managed by the Colorado Enterprise Fund, a 501(c)3 Community Development
Financial Institution (CDFI), with oversight by a committee of the contributors to the fund and loan loss
reserve.
The Loan Fund opened as a $5 million program for small companies (20 or fewer employees)
adversely impacted by the COVID-19 pandemic. Large numbers of local firms have been denied or are
otherwise unable to access Federal relief programs such as the Payroll Protection Program (PPP).
Many of these local companies require immediate access to capital to protect local jobs, and in some
cases, to ensure survival of their small businesses. CEF has been able to lend $2.75 million to 95
businesses (65 within Fort Collins or 68%) with an additional $5.6 million in requested funding from 205
businesses.
Recipient Demographics:
55% owned by low-income individuals
41% owned by women
13% minority-owned
24% are professional service providers
21% are food/beverage/agriculture
19% are retail
591 jobs have been retained
121 jobs have been created
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