LOS ANGELES — The county Board of Supervisors voted April 14 to create a public-private relief fund for small businesses hit hard by the coronavirus pandemic and then quickly announced capital commitments of more than $28 million.
Supervisor Mark Ridley-Thomas recommended combining county dollars with support from philanthropic organizations and financial institutions that serve small businesses in order to keep owners afloat.
“Experience shows that the small business owner will likely sustain the highest level of economic injury during this health crisis, and will be the least likely to recover from sustained economic loss,” Ridley-Thomas’ motion read in part. “This represents a significant threat to the county’s economic well-being, as more than 90% of businesses in the county employ fewer than 20 workers.”
The federal coronavirus relief bill or CARES Act provides support for small business owners, but Ridley-Thomas said federal aid won’t come quickly enough and probably won’t help informal businesses like street vendors and home-based entrepreneurs. He also predicted that immigrant business owners would avoid seeking federal relief due to fears of deportation.
“The county must come to the aid of these businesses and entrepreneurs, or risk economic collapse in the communities they live in and serve,” the motion stated.
Following the vote, Ridley-Thomas announced that the county will seed the fund with $12 million and that private sector commitments have been made by Goldman Sachs Group, Inc. for up to $15 million, Well Fargo Foundation for $1 million, Citi Community Development for $100,000 and by Union Bank Foundation for $25,000.
“I am proud of Goldman Sachs, Wells Fargo Foundation, Citi and our other private sector partners for joining with the county of Los Angeles to bring needed resources to our businesses, who are suffering great losses as we cope with this unprecedented pandemic,” Ridley-Thomas said in a statement issued after the vote.
The relief fund may be used for bridge funding for businesses likely to receive federal disaster assistance; low-cost working capital loans to businesses that may not qualify for federal dollars; and cash grants to micro-entrepreneurs with less than nine employees and other highly vulnerable businesses.
Ridley-Thomas said the partnership with Goldman Sachs will open up the opportunity for up to $15 million of Paycheck Protection Program loans targeting micro-enterprises and nonprofits through Goldman Sachs’ national community development financial institution partner, Community Reinvestment Fund, USA.
The Community Reinvestment Fund will work through local partners to reach target businesses and nonprofits without traditional banking relationships, according to Ridley-Thomas.
“Ensuring all businesses have access to these resources is of paramount importance,” Ridley-Thomas said. “We know from history and intuitively that the best-resourced businesses are often first in line for available relief.”
A Community Reinvestment Fund representative said the fund had come together quickly.
“This is an inspiring example of how public-private partnerships can deliver much-needed capital rapidly and at scale,” said Keith Rachey, chief impact officer for Community Reinvestment Fund. “With the dedication of community partners on the ground, and the generous support of private sector partners, CRF is proud to help make a difference for small businesses and nonprofits in Los Angeles County.”
The money from Wells Fargo also will fund grants and technical assistance to small businesses.
“We thank the county of Los Angeles for its leadership and collaboration to help our small business community which is so vital to our local economy,” said Gregg Sherkin, senior vice president and senior manager of Wells Fargo’s corporate philanthropy and community relations.
Additional support from Citi will to go to the Los Angeles Area Chamber of Commerce to provide additional technical assistance and outreach for businesses. MUFG Union Bank Foundation’s contribution will provide an operating grant for local partners working to deploy the relief fund.
“During this uncertain time, we need to come together to ensure that vital small business supports are as accessible and inclusive as possible,” said James Alva, senior vice president and market manager for Citi Community Development.
Ridley-Thomas said the county would continue to tap private sector companies and nonprofits for contributions to the relief fund.
“It is an important start, but it is just that: a start,” he said.
The county also has other programs in place to help small businesses.
The Los Angeles County Development Authority is already offering low-interest loans of up to $20,000 to small businesses that have 25 or fewer employees and have been affected by the pandemic.The county has also established a $500,000 fund through the Department of Workforce Development, Aging and Community Service to make $10,000 grants available to struggling small businesses. Priority is given to businesses in unincorporated areas of the county, and about 25% of awards have been reserved for social enterprises serving vulnerable populations.
“Experience shows that the small business owner will likely sustain the highest level of economic injury.”
— Supervisor Mark Ridley-Thomas
Independent Wire Services