In the News: Don’t Leave Minority and Women-Owned Businesses Out of the Bailout
Check out Rebecca Karp’s Op Ed in Crain’s. The article considers the impact of the Covid-19 pandemic on small businesses—especially minority and women-owned businesses, and recommends policy and program changes to ensure that the recovery process is inclusive and equitable for the businesses that will need it most. Read the full article below.
Don’t Leave Minority and Women-Owned Businesses Out of the Bailout
This article originally appeared in Crain's.
While we remain in the throes of the Covid-19 pandemic, we all know there is another crisis coming.
Like a tsunami after an earthquake, the devastation this prolonged shutdown will wreak on our economy, particularly small businesses, will be enormous. When the water recedes we just don't know how many restaurants will reopen—how small businesses, who have already had to fight for everything they have in a competitive city, will fare.
Small businesses are a huge part of the magic of our city; they are the foundation of our reputation as the entrepreneurial heartbeat of the world. It's time to start planning for what comes next.
As a small business owner, who has spent my career helping make city economies inclusive so that small businesses—especially minority and women-owned businesses—can thrive, I have lived every lesson personally and know deeply how urgent this task is.
First, we must ensure that local and federal financial assistance gets to the people and businesses who need it.
Recently, the city opened applications for a new relief program offering small businesses affected by Covid-19 zero-interest loans up to $75,000. This is a great start, but in order to capitalize on those loans, small businesses and minority and women-owned businesses also have to qualify for them.
Delayed payments are part of life in business, but when you are a small business, money late coming in is money late going out. The result is that bad or middling credit is part of life for many small businesses across the city. To ensure that those who need those loans can take advantage of them, we must relax eligibility requirements.
Similarly, the federal stimulus package offers $350 billion in small business grants. This is a step in the right direction, but for these funds to be effective they will need to be disbursed efficiently. That is best done at the local, rather than federal level.
Second, we must ensure that when the pandemic is over, small businesses have somewhere to come home to.
Over the past decade, small businesses have found a home in coworking space. If those companies close they will displace thousands of small businesses, with nowhere to go in one of the most expensive real estate markets in the world.
This is not to say we need to write a blank check to companies that were already looking at challenging balance sheets. But we cannot allow the closure of a few key supportive companies to put tens of thousands of tomorrow’s innovators on the street.
Lastly, we must ensure that we are prepared for a wave of economic development once we’re on the other side of this—and that we rebuild our economy in a way that emphasizes equity and inclusion.
Prior to the crisis we were in a boom market. That day will return—and when it does, there will be many people with high-level skills looking for work. We need to be ready to quickly reorient these job seekers. The city should create a mechanism for quick skills assessments now, in service of pairing those workers with the jobs they qualify for.
In the process, as we recover economically, we cannot lose sight of minority and women-owned businesses and those facing chronic disadvantages in our economy. For instance, procurement mechanisms must adhere closely to Disadvantaged Business Enterprise regulations and local hiring must be a prerequisite for development.
Looking forward, small businesses need to be prepared to weather any kind of crisis—pandemics, cyberattacks, storms—through best-in-class business continuity planning and preparedness training.
COVID-19 has indiscriminately devastated brick-and-mortar businesses, consulting firms, and care providers alike. Business continuity planning will help small businesses recover faster.
Minority and women-owned businesses in particular, who often run their businesses with fewer resources in the bank, a weaker social and professional network, and less access to loans and investments, are already disadvantaged. Proactive planning to survive the next economic disaster is critical.
We made inroads after Superstorm Sandy. I worked with the Port Authority of New York and New Jersey to develop training for business owners to assess their preparedness and develop continuity plans. That planning allowed businesses to determine what actions to take to protect their companies and workforce, and know when and how to advocate. These sorts of efforts should be expanded so that we’re ready for the next big one.
Policymakers have taken the first important steps to stem the damage to our economy this prolonged crisis has wrought—but we still urgently need a bold, equitable vision to aid small businesses, which are the backbone of our economic strength and bearing the brunt of the economic pain.
Rebecca Karp is the CEO of Karp Strategies, a city-based urban planning, community-economic development and real estate advisory firm.