Small businesses: Need help now? Look locally

woman at shop door, open sign

By Kelly Asche

A number of programs have been released over the last few weeks to support our small businesses. As can be imagined, the need has been enormous and right now the turn-around times to answering clarifying questions and processing applications can take a bit longer than some small businesses have time for.

This is where local business support organizations are stepping in to help by providing relief for current debt obligations, offering additional resources to bridge the gap in financing, and working as a conduit for community members to continue supporting their local businesses during these difficult times.

Laura Ostlie is the Community Development Planner for the Upper Minnesota Valley Regional Development Commission in Appleton, MN. According to her, “Many of the local economic development organizations that have revolving loan fund programs have provided businesses a reprieve from paying off some of their current debt through 90-day deferrals.” For example, both the Benson EDA and Lac qui Parle County have offered their revolving loan borrowers a 90-day loan repayment deferment.

A number of local economic development organizations are also developing new loan programs to provide essentially “gap financing,” so businesses can continue to meet payroll and other current obligations while they determine if they are eligible for some of the larger funds available through the state and federal programs. Big Stone Area Growth is offering $5,000 emergency loan funds at 0% and the first payment not due for six months.  Vicki Oakes, Director of Big Stone Area Growth, says they aren’t asking too many questions of businesses looking for help.

“These are meant to be very quick turnaround loans to help out while we help them apply for more help through the state and federal programs.”

If you’re looking for examples of applications to develop something similar in your region, check out Big Stone Area Growth’s application here. And Kandiyohi County Economic Development Commission developed a similar loan program.

There have also been a number of examples of local organizations attempting to engage the general public in supporting their community’s small businesses. The city of Benson’s mayor Terri Collins provided a fun video on her Facebook page a couple of weeks ago to encourage and challenge people to continue to support local business. The city’s page also includes all of the bar and restaurants’ to-go menus.

One highly successful campaign was organized by the Big Stone Lake Area Chamber of Commerce. They hosted a live telethon, broadcasted on 1350 AM and on Facebook Live, to take orders for gift certificates of any amount to local businesses. The gift card strategy provides a quick “loan” to businesses right away, but then community members can also decide if they want to claim their loan back later by cashing in their gift certificate when the businesses reopen or just ignore them, essentially turning their purchase into a donation.

Before the telethon even started, they had already raised over $20,000. By the end of the telethon, they had raised nearly $80,000. They have now extended the campaign and are going for $100,000. They even broadened the campaign where people can donate money to the campaign and the Chamber itself will purchase gift certificates and give those to people in need in the community.

The programs being offered by the state and federal government are necessary, but it will take time to process all the applications and distribute the money. These local efforts can help immensely as businesses face bills and other obligations without any revenue streams.

From a policy perspective, it’s great to see local organizations tapping their own resources to help small businesses. Many times, these organizations have the capability to act quickly and with more flexibility than some of the larger state and nationwide programs. With the future is still very uncertain for businesses, though, local quick turnaround loans also come with a higher degree of risk. Some of the businesses tapping these local resources will have to close and subsequently default on these loans. Depending on the local economic development organization’s capacity, this could be a large hit on the financial stability for some of these organizations that could require some state intervention while the economy recovers.