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Micro-Business Restart Loan Program
from Serving the Community: 2020 Annual Report - The Community Foundation of Muncie & Delaware County
by cfmdin
July 2020: Micro-Business Restart Loan Program
After the mandated shut down due to COVID-19, many small businesses, especially minority- and women-owned businesses, faced challenges as they began to reopen. Loss of income during shutdown, along with the added cost of safety equipment made reopening feel nearly impossible. The Foundation’s first-ever recoverable grant provided funding for small business loans in the community to help them overcome this barrier.
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Through community conversations, The Community Foundation learned that many small businesses were not only struggling due to loss of income during the shutdown, but they were challenged by the expenses that came along with reopening.
The challenges were even greater for minorityand women-owned businesses. News reports released in late spring highlighted it was less common for small business owners who are minorities or women to have relationships with bankers than for white, male entrepreneurs. Without a relationship with a bank, tapping into federal relief funding, like the Paycheck Protection Program, was nearly impossible.
Frank Scott II, owner of K & B Car Wash, LLC received a micro-business loan and participated in additional coaching from the Innovation Connector.
To support the small business community in Muncie and Delaware County, the Foundation partnered with the Innovation Connector and the East Central Indiana Small Business Development Center to provide funding for the Micro-Business Restart Loan Program. Small businesses (5 or fewer employees), with a preference for minority- or women-owned businesses who had not received other major relief funding were eligible to apply for nointerest loans between $1,000 and $2,500 to be repaid by the end of 2020.
Not only was this a pilot loan program for small businesses in the community, but it was a new and risky pilot loan program for The Community Foundation. The Community Foundation used $25,000 in funds from the budget reserves to award the first recoverable grant in the Foundation’s history.
- Frank Scott II, owner of K & B Car Wash, LLC. Muncie, IN
“After talking with those on the ground, we recognized that there was inequity in the relief programs available to small businesses in the face of the pandemic,” said Marcy Minton, senior program officer. Marcy worked closely with the Innovation Connector through the loan-making process. “While pulling funds from our reserves was a risk, it was an even bigger opportunity to try something new to impact a need in our community. It is a program from which we can learn and grow.”
The Foundation saw the loan program as an investment in the community. While loans were issued with no interest, recipients were assessed a 2-percent administration fee on the cost of their loan. The $500 was a return on that investment. The Innovation Connector was awarded $5,000 to administer the loan program. The $500 in administration fees was also returned to the Innovation Connector to provide additional operating support needed to manage the program. In addition to financial support through the Micro-Business Restart Loan program, the Innovation Connector provided business guidance to loan recipients.
“This small business loan opportunity came at the right time for small business owners,” said Ted Baker, CEO and executive director of the Innovation Connector, a full-service business incubator. “The ten recipients of this no-interest loan needed additional capital to bring their businesses back to life after the impact of the Covid-19 economic shutdown. Our community is fortunate to have a community foundation that is bold enough to engage in new activities to assist real needs in a community. The Innovation Connector is proud to partner with them.”
PARTICIPANT DATA
10 ORGANIZATIONS
8 Located in Muncie
2 Located in Delaware Co.
6 Minority Business Owners
