As LISC celebrates the extraordinary contributions of small businesses this week, we are taking stock of how our grantmaking and other support touched 16,000 small businesses across the country, and what they have told us they need to survive and flourish going forward. Affordable capital and technical assistance top the list. We’ve heard them, loud and clear, and are responding with increased investment, like a new partnership with the Verizon Small Business Digital Ready initiative.
This year during National Small Business Week, we at LISC are reflecting on what the past 18 months have taught us about supporting entrepreneurs in underinvested places and communities of color—and where we go from here.
We know that small businesses, which took an immediate and devastating hit from COVID, are the lifeblood of local economies and communities. But we also saw how BIPOC- and women-owned businesses were extra vulnerable to the ravages of the pandemic, suffering sharper revenue declines and closures.
This was due in part to their prevalence in hard-hit industries, most with thin margins, such as food, services, and retail trade. But also to longstanding racial and gender discrimination that has resulted in historically inadequate banking relationships and the added obstacle of little or no access to technical support to help plan, capitalize, market and grow their businesses.
To combat this trend, since March of 2020, LISC has disbursed nearly $83 million in small business relief and resiliency grants through our national distribution platform to more than 6,300 business owners, throughout urban and rural America. And when we count the grants distributed through our network of 38 local offices, and the partner funding that made that possible, the totals reach an extraordinary $240 million disbursed to 16,000 small businesses to date.
Of our national grants, more than 89 percent went to businesses owned by people of color, and to more than 66 percent owned by women. Two out of three of those businesses operate in communities designated as “distressed,” meaning they are made up of majority low- to moderate-income households.
All this, in addition to $215.5 million in low-interest small business loans that went to nearly 2,200 enterprises extended through LISC’s lending services.
As we work to support entrepreneurs’ survival and equitable recovery—one that will see BIPOC- and women-owned businesses in a stronger position than they were before we ever heard of COVID—we are asking for their feedback. And what we’ve learned thus far has already significantly shaped how we are strategizing and investing as we move forward.
To date, we have surveyed more than 5,300 of the small business owners who received grants from national LISC, with an exceptional 68 percent response rate, letting us know what was most valuable about the capital they received, how they used it, and what they feel they need to continue operating and to build resiliency, even as the pandemic wears on.
We were encouraged by so much of what we heard from business owners: More than 95 percent reported the grant being helpful or very helpful in maintaining operations and business revenue. The majority found the support critical to helping cover wages, inventory, past due bills, or other necessities.
And while more than 40 percent of grantees reported that their workforce shrank during the onset of the pandemic, that figure fell to less than 20 percent after they received a grant. More than a quarter of businesses, in fact, reported increasing their workforce post grant.
As one home remodeling contractor from Louisiana put it, “at the time we received the grant, our operating account was extremely low and we were almost unable to make payroll. The grant provided the funds we needed to not only make payroll but to provide additional PPE and materials for projects.” Others described being able to rehire laid-off workers, or take on extra help they badly needed.
We were also struck by entrepreneurs’ urgent plea for technical assistance: coaching and guidance about accessing capital, creating business plans for growth and navigating the pandemic and beyond, assistance with marketing and technology and help finding affordable space for brick-and-mortar businesses. Less than a quarter (22.6%) of the owners surveyed reported receiving any technical assistance whatsoever during Covid-related disruptions and of those, the majority said they didn’t know it was available in their communities, or felt it wasn’t accessible. At the same time, nearly two out of three (65.7%) said technical assistance would help them, even in the absence of cash assistance.
As a result, helping these entrepreneurs skill up and build their capacity to run their businesses effectively is at the top of our priority list. Part of the funding we have received from our corporate and foundation partners during Covid – over $5M – has gone to more 130 business development nonprofit organizations (BD0s) across the country that provide assistance to small enterprises and help build the community-level infrastructure required for long-term recovery and revitalization.
We are very pleased to announce our partnership with the Verizon Small Business Digital Ready program, a broad platform of digital resources that help empower entrepreneurs to plan, manage and grow their businesses. In 2020 and early 2021, Verizon supported $17.5 in small business grants that LISC disbursed in the communities we work with. Now, Verizon Small Business Digital Ready is offering coaching, community networking, and a marketplace of specially curated tools and services for small businesses. And it’s all offered free of charge.
Clearly, the pandemic is not over. It will continue to exacerbate our country’s pre-existing conditions—racial and economic inequities that have trapped tens of millions of people in poverty and injustice—unless we harness the political will, and continued public and private support, to change the policies and systems that have gotten us where we are today. America needs all entrepreneurs to flourish so we can collectively flourish. We know what it takes to help them get there because they’ve told us. So let’s get to it.
ABOUT THE AUTHOR
Bill Taft, Senior Vice President of Economic Development
Bill leads the expansion of LISC’s inclusive economic development efforts in its 37 local programs by investing in people, places, and businesses. Bill has been with LISC since 2005, initially serving as LISC Indianapolis’ Executive Director, later as Program Vice President, and now as Senior Vice President for Economic Development. Under Bill’s leadership, LISC Indianapolis invested over $240 million to leverage $1 billion of investment in the core urban neighborhoods of Indianapolis. Prior to that, Bill was President of Southeast Neighborhood Development, Inc. (SEND) for 14 years, overseeing the early phases of revitalizing the Fountain Square area of Indianapolis. Bill holds an undergraduate degree from Cedarville University and a master’s from Ball State University’s College of Architecture and Planning.