In response to the novel coronavirus crisis, which has caused the shuttering of millions of small business around the country and left those remaining at risk of closing, the city has entered into an agreement with the Pasadena Community Foundation (PCF) to allocate $500,000 in the form of up to $10,000 in grants to help struggling businesses stay open.
City Council members approved the program, but after extended discussion on whether the council should oversee distribution of the grants, the proposal was sent back to staff to find a way for the council to ensure better transparency on how the money is allocated.
A brief kerfuffle sparked by City Council member Steve Madison’s desire for council oversight of those receiving the funds, an idea supported by Council member Victor Gordo, resulted in Council member Margaret McAustin calling Madison’s suggestion “an insult” to PCF President and CEO Jennifer DeVoll, who was presnt online during the council’s weekly Zoom meeting. It also caused Council member Gene Masuda to vote against the plan.
“I was against the motion the way it was presented, yet I was in favor to accept the staff’s recommendation and not to add an extra step for the council to view and approve the list of businesses receiving the funds,” Masuda told Eddie Rivera of the news website Pasadena Now. “No matter what, I am pleased that businesses will receive needed funds to help their openings.”
While thankful for the extra money through the COVID-19 Small Business Disaster Relief Fund, which will be administered by the PCF, with checks distributed by the Pasadena Chamber of Commerce, Chamber President and CEO Paul Little wished it could have been more.
“While it is not the $1 million originally requested, the $500,000 being considered could save 50 locally owned storefront small businesses throughout our city,” Little, a former Pasadena City Council member, wrote to the council. “I appreciate very much the city of Pasadena stepping up to provide meaningful and impactful financial support for your local small business community. The funds are much needed and very welcome.”
After making the initial allocation, the city will help promote private philanthropy with a dedicated match of $250,000 for other funds raised through the PCF and the Chamber of Commerce, said Eric Duyshart, the city’s economic development manager.
National research, states the city staff report prepared on the grant program, indicates the need for support is “urgent and immediate.”
Nearly 7.5 million, or one-quarter of the nation’s small businesses, are at risk of closing over the next three months. “In a survey conducted by Harvard researchers these statistics were confirmed, projecting that if the crisis lasts for six months 38 percent of small businesses will close,” states the city staff report.
The survey, according to the report, also found that small business owners are having the least success accessing federal relief funding. While 78 percent of survey respondents applied for federal relief associated with COVID-19, only 48 percent received funding. The smallest businesses had the least success, the report states.
“Half of the businesses that received funding through the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan Program (EIDL) programs disclosed their funding amount was less than $8,000. The survey found that most small business owners report the CARES Act/PPP or EIDL funding is not enough to sustain them,” the report states.
“Most cited a need for an additional $10,000. In a separate survey conducted by a small business support service, Hello Alice, the results found that most small businesses who responded were in danger of closing,” and said they would close for lack of $10,000.
The program is modeled after similar coronavirus relief programs initiated in a number of other cities.
The city of Monterey, for instance, contributed $1 million to Monterey Community Foundation’s Small Business Relief Fund, offering grants of up to $25,000.
The city of Santa Clara has committed $800,000 to create a Small Business Assistance Grant Program, already awarding 110 grants of $5,000 or $10,000.
The Silicon Valley Central Chamber of Commerce recently launched a GoFundMe campaign to help raise additional funding for a grant program.
The city of Gresham, Oregon has awarded $380,000 in grants of $2,000 to $10,000 to small businesses.
In the Pasadena program, eligibility requirements include being locally and independently owned, located in Pasadena, and in good standing with the city and state. Another is having no lawsuits pending against the city. Applicants must not have received $10,000 or more from either the SBA Paycheck Protection Program (PPP) or the SBA Economic Injury Disaster Loan (EIDL) or other SBA, government or other grant source related to COVID-19. They must also have demonstrated a strong track record of business operations under the current ownership, $3 million or less in annual gross revenue, experienced at least a 25 percent decline in revenues due to COVID-19 between Jan. 1 and April 30, and demonstrated a strong track record of business operations under current ownership. Applicants must also demonstrate the dedication and wherewithal to remain open for a period of 12 months after receipt of the relief funds, states the city report.
Lifelong resident and business owner Erica Gutierrez lauded the city and PCF for creating and administering the fund, respectively, but said it needs to be inclusive.
In collaboration with the city, PCF and the chamber will develop criteria and appoint a selection committee, the majority of whose members will be Pasadena residents.
“I urge you to consider and add the following requirements to the agreement with PCF: 1. Ensure that there is racial diversity on the selection committee through the inclusion of Black and Brown community leaders and members 2. Give priority to Black and Brown Pasadena residents that own businesses in the Fair Oaks/Orange Grove specific plan areas and other similar low-income areas that are consistently underrepresented in economic opportunities due to systemic racism and lack of intentional diversity 3. Give priority to small businesses that offer unique services and/or products and whose closure would significantly impact the diversity and 4. Change full-time employee requirement to 1-20 (from 2 to 20),” Gutierrez wrote.
Much like Little, Gutierrez also wanted more money, writing, “Please also consider providing grants larger than $10,000 to help cover costs related to COVID-19 requirements and strategic changes to increase likelihood of long-term success.”