Small businesses are the economic backbone of California as they employ nearly half of all Californians in 4 million businesses throughout the state. Because the COVID-19 pandemic has hit small business owners with such disproportionate intensity, we immediately jumped into action even before stay-at-home orders were issued to help businesses stay afloat.
The Governor’s Office of Business and Economic Development (GO-Biz) and the California Infrastructure and Economic Development (IBank) each feature programs aimed at supporting and assisting small business. The objective quickly transitioned from business expansion to business survival. An active IBank program in the Small Business Finance Center was created specifically for emergency declarations. The Disaster Relief Loan Guarantee program provides a lender up to a 95% guarantee on any loans they make to a qualifying small business should those loans go into default, enticing more lenders into a precarious environment.
In the last fiscal year, another IBank program, the Small Business Loan Guarantee Program was used more than 575 times by lenders to support more than $500 million of capital injected into the small business community. Those loans preserved or created more than 15,750 jobs.
Because of the severity of COVID-19, few businesses have been spared. Of course, a small governmental program by itself will fall woefully short of addressing the economic damage done to millions of small businesses across the state. Additionally, the Governor has initiated a number of new measures to mitigate the damage. To weather this epic storm, this is a time when we must layer creative solutions and multiple sources of financing from all sources to leverage taxpayer dollars.
The time frames in which we are operating are unprecedented and each day we are talking to more potential partners in the public and private sectors to ensure we have the best chance of success in this vital moment. IBank has seven partner Financial Development Corporations throughout the state as well as a growing list of lending partners that have enrolled in the 95% disaster relief loan guarantee program. These partnerships are pivotal in our ability to fight the economic crisis.
Small businesses can’t be saved by federal and state programs alone. They need to be creative to not only survive this pandemic, but to come back and thrive. We see business owners leveraging bridge loans to remain open and keep employees on payroll, but simultaneously reimagining their craft, location and style of service. Loans are used for constructing drive-through windows to safely serve customers in places we would never have thought necessary or for investments in green upgrades The shutdown has been stressful but some are looking ahead and capitalizing on the downtime to invest in new projects for long-term benefits – to reinvent their businesses for the future.
California can and will recover and return to its prior role driving the innovation of the global economy. It will take time and vision and yes, it will require whatever support that the state can provide. The loan guarantee program enables the state to partner with like-minded lenders, by mitigating a substantial portion of the risk they assume for providing capital to small businesses in the midst of a crisis. Small businesses are suffering the brunt of the devastation, but if we all extend our hands in collaboration, they are also certain to spearhead our recovery. It is often the smallest and most vulnerable of businesses, owned by one person or one family, that provide the diverse and brilliant paths to the California dream which weave the fabric of the vibrant communities we cherish.