Thriving Small Businesses Means A Thriving Bay Area

Patrick DugganPCV News, Small Business Advising And Mentoring, Small Business Loans, Small Business Resources

bay area small business cdfi

Picture a few of your favorite small and independent businesses. Maybe you love stopping by Equator Coffee or Boba Guys on the way into work, shopping at Benny Gold or Heath Ceramics, working out at The Dailey Method, or sitting down at Brown Sugar Kitchen and hoping a few Warriors grab the table next to you. Now what if I told you that without a small handful of government programs, many of your favorite places might not exist?

The so-called “Skinny Budget” cuts funding for several successful bi-partisan small business programs that helped launch and grow tens of thousands of small businesses across the Bay Area – and hundreds of thousands across America. It cuts $42 million from Small Business Administration programs aimed at new job creation; $32 million from programs that help people of color start companies and hire more employees; and completely eliminates the Community Development Financial Institution (CDFI) program that funds community banks, nonprofits, and credit unions who lend to the 70% of small businesses that banks turn down.

That’s $284 million – less than the cost of two F-35 fighter jets – and a drop in the bucket when you consider these programs turn that funding into over a billion dollars of local economic activity, tens of thousands of new small businesses, and hundreds of thousands of new jobs for working people. Without these programs, a lot of the great local businesses that make our communities what they are wouldn’t have gotten off the ground.

Why is that? Let’s take small business lending, for example.

For generations, most small business owners got their funding from community banks or credit unions. Starting with the 80’s era of deregulation, big banks started buying up a lot of the smaller banks around the country. Over time, those big banks drastically cut back on loans to America’s 28 million small business owners. It should also come as no surprise that small businesses owned by people of color, native people, women, and immigrants – which have always had a hard time getting loans from the big banks – saw their funding sources dry up even faster.

The Association for Enterprise Opportunity notes that 8,000 small business loan requests are declined every business day. Here in California, the fastest growing segments of job-creating small business owners are African-American women and Latino women — and the Small Business Administration says they’re three-times as likely to be turned down for loans by a bank.

Close to 40% of us Californians work at a small business – and here in the Bay Area we have over 200,000 of them. Our small businesses are already under a lot of pressure from sky-rocketing rents paired with much-needed increases in minimum wages and benefits. If small business owners are also squeezed out of the resources they need to keep their companies competitive and growing, we could see more companies close for no other reason than they couldn’t get small amounts of affordable capital.

The cuts to small business programs will hurt America’s job creators in numerous ways, and small business lending is just one example. Now is not the time to take away even more resources from America’s job creators.

Small businesses are the character of our communities. The bakery that makes your favorite alfajores, the store that sells those one-of-a-kind-shirts and hats you love, the hardware store that walks you through painting a room or fixing your showerhead. That list goes on and on. Small businesses make your neighborhood, town, or city unique. Small businesses employ 120,000,000 Americans (that’s one in every two jobs!) We should be empowering small business owners to increase their competitiveness while at the same time creating quality jobs with better wages and easier access to benefits. Then every community and worker in the Bay Area benefits.

What can you do? Contact your Representative and Senators and let them know you want them to support small businesses and the programs that keep them strong. And support small and local businesses with your dollars!

 

 

Patrick Duggan is a Director at Pacific Community Ventures, a Bay Area CDFI that’s worked hand-in-hand with the small business community for twenty years. Our other local CDFIs include Working Solutions; Opportunity Fund; Northern California Community Loan Fund; ICA Fund Good Jobs; Mission Economic Development Agency; Mission Asset Fund; Main Street Launch; Beneficial State Bank; and Community Bank of the Bay. Get to know them!