DATE: April 28, 2022
TO: Council Economic Development Committee
FROM: Assistant City Manager
SUBJECT: Update on COVID-19 Economic Recovery Small Business Assistance Grants and Community Development Block Grant Funded Small Business Assistance Grants
RECOMMENDATION
That the Council Economic Development Committee receives an update on the American Rescue Plan Act (ARPA) funded COVID-19 Economic Recovery Small Business Assistance Grant Program and the Community Development Block Grant (CDBG) funded Small Business Assistance Grant Program for Microenterprises.
SUMMARY
As part of the City of Hayward COVID-19 Economic Recovery efforts, $100,000 was allocated from ARPA funding to implement the Small Business Assistance Grant Program. In addition, the Economic Development division was also allocated $100,000 in CDBG funds to implement another round of the Small Business Assistance Grant Program for Microenterprises. In total, 40 businesses received funding through these programs. This report provides a summary of those two grant programs and the businesses that received assistance.
BACKGROUND
ARPA, also known as the COVID-19 Stimulus Package, included over $65 billion in direct federal relief to cities in order to address the economic and fiscal impacts of the COVID crisis and to assist in the recovery of local communities. The City of Hayward received approximately $38 million in local relief from the federal government to address the internal and external needs of the City associated with the COVID crisis. Approximately $2 million has been allocated towards Economic Recovery efforts to support local businesses and the workforce.
In June 2021, the Council Economic Development Committee reviewed the nine Economic Recovery programs to be implemented over 3 years to assist both businesses and the workforce to adapt to the new changing economy. The nine adopted programs include: Hayward Open For Business Marketing Campaign; Together for Hayward Gift Card Program; Small Business Assistance Grant Program; Restaurant Relaunch Program; Façade Improvement Program; Get Digital Program; Hire Hayward Program; Earn and Learn Program; and the Tuition Assistance Program. Of the allocated $2 Million, $100,000 was designated for the Small Business Assistance Grant Program.
In addition to the COVID-19 Economic Recovery Programs, the Council allocated funding from the CDBG funding program of $100,000 for the implementation of another round of grants under the previously established Small Business Assistance Grant Program for Microenterprises.
DISCUSSION
ARPA Small Business Assistance Grant Program
As one part of the larger COVID-19 Economic Recovery programs, a total of $100,000 was allocated for the Small Business Assistance Grant Program. This allowed for a total of twenty (20) $5,000 grants to be issued to small businesses located throughout the community. Unlike the CDBG Microenterprise grant program, eligible businesses were not limited to those with five or fewer employees. Grant funds could be used for any expense associated with the business such as equipment and furniture purchases, inventory purchases, PPE items, new signage, websites, utilities, etc. All grant dollars were issued as a reimbursement once the business submitted receipts verifying the expenses were associated with the business.
As in years past, City staff identified and reached out to targeted businesses to participate in the program. Staff utilized the list of businesses that had applied for the COVID Resiliency grant program and the County CARES grant program and had not received funding under either of these programs. This year, the focus was to serve our Black/African American and other minority owned businesses and home-based childcare providers. Home-based childcare providers are a vital piece of a successful economy, by supporting parents that were essential workers during the shelter in place and allowing parents to return to work as shelter-in-place orders were lifted.
As part of the application process, all participating businesses submitted their demographic data. This information is used to assist staff to ensure that the chosen business owner demographics reflected the City’s commitments to racial equity and inclusion. Ninety percent (90%) of the grants issued went to minority small business owners. Of the grantees, 12 of the businesses are woman-owned enterprises and six of those are female-head of houses. A complete breakdown of the demographics can be found as Attachment II.
A complete list of the Small Business Assistance Grant recipients can be found as Attachment III. Businesses receiving these grants had never before received grant funding from the City.
CDBG Microenterprise Small Business Assistance Grant Program In 2018, the City launched the Small Business Assistance Grant Program for Microenterprises. This program, which issues $5,000 grants, is designed to support the smallest businesses in the community. To qualify, the business may not have more than five employees. Like the APRA grant program above, the CDBG grant funds can be used for any expense associated with the small business.
At the April 27, 2021 Council meeting, the Council adopted the annual funding program for the CDBG program. As part of the funding recommendation, the Economic Development division received $100,000 to implement another round of grants as part of the Program, which allowed for 20 businesses to receive funding. As in years past, City staff identified and reached out to targeted businesses to participate in the Program. This year, the focus was to serve our Black/African American owned businesses and home-based childcare providers. In previous years, the City required the small business to have a commercial storefront. This year, the Council allowed for home-based childcare providers to be selected, recognizing that they are a vital piece of the local economy.
Of the 20 grants issued, 19 were issued to minority business owners with 85% of the grants issued to Black/African American or Black/Native American business owners. This year, 14 of the businesses were woman-owned businesses and nine of those identified themselves as head of household. We were able to support five home-based daycare businesses this year. A complete breakdown of grantee demographics can be found as Attachment II.
A complete list of the Small Business Assistance Grant recipients can be found as Attachment III. Since the Program inception in 2018, 80 microenterprise businesses in the City of Hayward have received one of the $5,000 grants. No business has received funding more than one year.
Attachment IV is a map indicating the location of the grant recipients for both the CDBG and ARPA grant programs. As part of the selection criteria for both of these programs, staff works to ensure that grantees are distributed throughout the City rather than one or two commercial corridors.
ECONOMIC IMPACT
While the funding offered to these small businesses through both grant programs are small grant amounts, they often have a large impact on the businesses. Small businesses like these often operate on narrow profitability margins. Many of the businesses do not have the ability to make purchases of new equipment or to upgrade their furniture due to these small margins. This has only been magnified even more during the past two years of the pandemic due to supply chain issues, labor availability, and rising inflation. One of grant recipient this year was The Family Treats Shop, operated by the Bearden family. Their story was recently featured in the local news about how their entrepreneurial efforts of starting their small business has helped to stabilize their housing situation and keep them from returning to the unhoused population.
FISCAL IMPACT
The funding used for both grant programs are allocated through federal ARPA and CDBG monies. No General Fund dollars are used for the grants. The only fiscal impact for the City is the staff time needed to implement the program, which includes business outreach, processing of applications and receipts, and issuing payments.
Prepared by: Catherine Ralston, Economic Development Specialist Recommended by: Paul Nguyen, Economic Development Manager Jennifer Off, Deputy City Manager
Approved by:
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Kelly McAdoo, City Manager
“Once Homeless in the Bay Area, now they’re entrepreneurs”, The Mercury News, February 23, 2022.