What was the challenge?
The Small Business Administration (SBA) has strategic goals to support small business revenue and restore small businesses after disasters, such as the 2020 COVID-19 pandemic. There was concern that the pandemic would exacerbate the challenges in obtaining working capital faced by historically underserved groups including racial and ethnic minorities and women.
What did we do?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed on March 27, 2020 allocated $5 billion for local communities to spend on activities including small business assistance. Local governments designed their own disbursement programs and made their own decisions about which groups to target for assistance and how to reach them. We conducted a descriptive study of local grant and loan programs using public information about funding programs and conversations with local officials. We documented the approaches local governments took in disbursing funding, the common challenges encountered by officials and applicants, and how these relate to SBA’s access goals.
What did we learn?
The demand for COVID-relief funding for small businesses was massive. Many local governments attempted to address concerns about access for business owners from historically underserved groups, but even those with similar aims often took different approaches, given the lack of evidence to inform program design. Regardless of the program model, there were several challenges for the local officials and potential applicants. There is reason to think that some of these challenges may increase the barriers to accessing capital for members of historically underrepresented groups, in particular minorities.
In sum, this work showed strong demand for evidence to inform program designs which address these challenges and increase access to small business grants and loan programs for historically underserved groups. More can be done to systematically address the lack of evidence to prepare the way for future programming.