The Governor’s Office of Business and Economic Development (GO-Biz) today announced the California Rebuilding Fund, a new public-private partnership that will leverage government backed capital to support California’s small businesses – especially the smallest under-served firms and entrepreneurs from communities that have been historically disenfranchised.
The initiative was approved yesterday during the California Infrastructure and Economic Development Bank’s (IBank) August board meeting. Prior to the approval, the State of California allocated $25 million and new statutory authority to IBank to enable a collaboration with the state’s private sector. This public-private partnership will in turn drive capital to Community Development Financial Institutions (CDFIs) and other mission-based lenders that provide much-needed loans to California’s underbanked small businesses. With the support of this new IBank funding, California’s CDFIs increase their capacity to help small businesses recover and reposition themselves to survive the realities of the COVID-19 marketplace.
“Businesses across California have been devastated by COVID-19 and our smallest businesses have been the hardest hit,” said Governor Newsom. “Ensuring that these businesses have access to capital will help jumpstart economic growth in communities across the state and provide needed support for entrepreneurs working hard to keep their doors open.”
The California Rebuilding Fund is the latest program supported by the State of California aimed at helping the state’s smallest small businesses in response to the COVID-19 crisis. Additional small business support by the State includes:
- On April 2, Governor Newsom announced that the state would allocate $50 million to IBank for a COVID Disaster Relief Loan Guarantee Program (DRLGP) that mitigates barriers to capital for those small businesses that do not qualify for federal disaster funds, including low wealth and immigrant communities. The program has since been expanded to include under-served businesses that may have received insufficient federal relief. In addition, the California Rebuilding Fund will also raise capital to enable CDFIs to fully utilize the COVID DRLGP.
- In his signing of the State Budget, Governor Newsom provided an additional $50 million across all IBank Small Business Finance Center programs for loan loss mitigation and reducing the cost of capital for small businesses.
- The California Office of the Small Business Advocate (CalOSBA) with California’s Office of Emergency Services (CalOES) have coordinated with six regional hubs to distribute free personal protective equipment (PPE) to under-served and impacted small businesses throughout the state. Orders for delivery as of 8/24 include: 7,188,010 face masks, 580,372 16.9oz bottles and 1,004 gallons of sanitizer, and 645,672 face shields for distribution.
- The California Entrepreneurship Task Force launched a series of virtual trainings to create a supportive community to help small businesses innovate and pivot during COVID-19.
- On July 8, California declared the month of July to be “California for All Small Business Month” and launched a new campaign, Calling ALL Californians: #ShopSafeShopLocal, to rally Californians to support their local small businesses and help connect California’s small business owners to digital tools and resources to help them get digital and adapt to the market during COVID-19.
- The State of California has leveraged its supported network of 86 small business centers that provide free one-on-one consulting and no-cost or low-cost trainings to help businesses create safe operations, access capital and develop strategies to adapt. Their support in over 30 languages has been critical to helping California small businesses survive.
Prior to the COVID-19 pandemic, 4.1 million small businesses operated in the state, with those that have less than 50 employees employing just over 40% of all workers. The California Rebuilding Fund will emphasize supporting these smallest of small businesses, which have traditionally been underbanked or have difficulty accessing capital.
“IBank’s Board of Directors approved this initiative to address a vital part of the California economy, by helping under-served small businesses adapt to the ‘new normal’ and seek long-term solutions for ensuring success,” said Scott Wu, IBank’s Executive Director.
“Now more than ever small businesses need access to capital and this innovative new public/private partnership program will assist those small businesses with needed funds to survive and thrive,” said California State Treasurer Fiona Ma.
“Across multiple industries, COVID-19 has fundamentally changed day-to-day business operations. Small businesses have been highly impacted, yet they persevere and embrace change finding new ways to pivot and survive in this marketplace,” said Isabel Guzman, Director of the CalOSBA. “By supporting our network of mission-based lenders, this funding will build a public-private partnership to help save California’s beloved Main Streets and preserve the small businesses that define our diverse communities.”
“The pandemic has left 30 to 40% of California’s small businesses on the verge of failure. To prevent a wave of closures, small businesses need access to affordable and responsible capital. However, due to large gaps in available capital and a system designed to naturally favor well-connected businesses, many of the smallest and most diverse businesses in our state are at risk of being left behind,” said Mark Herbert, Vice President, California at Small Business Majority. “If our economy is to recover, we must bridge this divide. Small Business Majority strongly supports this investment in the California Rebuilding Fund and applauds the IBank for taking action to ensure that small businesses have the resources they need during this time of crisis.”
“If we do not act quickly and intentionally, this multi-layered crisis may wipe out an entire segment of California’s economy – very small businesses. Often owned by immigrants and entrepreneurs of color, these businesses provide critical jobs and services in communities across our state,” said Luz Urrutia, CEO, Opportunity Fund. “The California Rebuilding Fund is a vital piece of the solution – leveraging public support to unlock private capital from banks and other investors. This effort will enable mission-based lenders like Opportunity Fund to provide financing and advising to entrepreneurs to restart, regenerate and rebuild California’s Main Street economy.”
The COVID-19 pandemic and efforts to mitigate the spread of the virus have presented extraordinary challenges for California’s small businesses. Small businesses across the state have stepped up to protect their employees and customers with innovations that meet the moment.
For more information, contact LAEDC’s Business Assistance Team, or visit the Go-Biz website.