Conference Presentation, Panel, Fireside Chat, Webinar
Small Business Community: What Happened to Mom and Pop?
Milken InstituteNigel Duara, Lenore Estrada, Isabella Casillas Guzman, Eugene Cornelius, Jr., Carolina Martinez, Mark J. Robertson, Sr., David Lesher
- Approximately 9 million small businesses were projected to face survival challenges in 2021 without additional government assistance, with some operators expected to operate at only 20% of previous revenue levels during recovery.
- The Small Business Administration (SBA) plans to distribute $28.6 billion through the Restaurant Revitalization Fund, with $18 billion targeted specifically for underserved women, veterans, and socially and economically disadvantaged businesses, while also awarding $5.2 billion to over 6,800 entities via the shuttered venues operator grant program.
- In 2021, 96% of Paycheck Protection Program (PPP) loans were issued to businesses with 20 employees or fewer, and the SBA expects increased federal contracting opportunities for disadvantaged businesses, translating to an additional $50 to $100 billion in opportunities over the next five years.
- The Community Navigator Pilot Program, a $100 million initiative funded by the American Rescue Plan, aims to create a hub-and-spoke network for underserved businesses, though it faces challenges regarding participation as a "hub" and perceptions of insufficient funding in large states like California.
- Small businesses are expected to diversify business models, integrate digital and in-person operations, move files and financials online, and enhance cybersecurity to mitigate risks such as regional closures due to fires and poor air quality.
- Financial resilience strategies include understanding fixed versus variable costs, distinguishing between loans and grants, calculating payroll costs for PPP eligibility, managing personal guarantees to avoid bankruptcy, and utilizing non-debt capital sources like crowdfunding, Kiva, and the California Rebuilding Fund.
- The SBA is working to streamline the Economic Injury Disaster Loan (EIDL) program and is collaborating with over 5,000 private financial partners to facilitate PPP loan forgiveness, while also aiming to improve financial literacy among entrepreneurs, a process estimated to take six to nine months for business owners to fully acknowledge.
- Opportunities are anticipated through the bipartisan infrastructure framework and the Build Back Better agenda, with the SBA repositioning programs to help businesses access a half-trillion-dollar federal marketplace for supply chain investments.
- Critical support is expected to come from CDFIs and technical assistance providers for entrepreneurs of color, alongside a recommended industry mindset shift toward increased marketing by non-profits to connect businesses with available resources.
- Long-term ecosystem building requires focusing on the "five C's" (Coaching, Capital, Connections, Climate, Culture) and maintaining a "nest egg" of cash, while businesses must recognize that while they cannot be fully disaster-proofed, risks can be mitigated through customer base diversification and business interruption insurance.