We know that small businesses have been severely affected by the COVID-19 economic downturn. The smallest businesses and minority-owned businesses are struggling the most yet have had the greatest difficulty in accessing the major programs intended to assist them. As state and local governments, private groups, and philanthropies step into the gap, economic development organizations (EDOs) are being asked to play a part in helping these and other small businesses.
To help state EDOs through this process, Smart Incentives recently collaborated with the Center for Regional Economic Competitiveness (CREC) and the State Economic Development Executives (SEDE) Network to create a guide for adjusting incentive programs to support small business recovery.
The guide starts with principles and ground rules. A coherent set of principles can help states respond strategically and consistently, rather than on an ad hoc or reactive basis. The principles reiterate the importance of connecting incentives to economic development goals and the value of assisting struggling businesses so that communities can recover and thrive. They acknowledge that all parties must recognize the severe fiscal constraints state and local governments themselves are facing. Finally, the principles explain that economic development return on investment (ROI) should incorporate social, economic and fiscal benefits – not just financial returns.
Questions for Consideration
The questions within the guide provide a framework for considering critical issues and tradeoffs. For example:
- Which small businesses are most important to assist right now?
- Which small business challenge are you trying to address?
- Is financial assistance the most pressing unmet need? Businesses may also require:
- Information and guidance to help them adapt operations and increase customer confidence
- Technical assistance to face new challenges, such as complying with health regulations and enabling online transactions
- Assistance covering new expenses associated with health and safety compliance
- Networking and business development advice to gain customers
- Affordable broadband access
- How can existing incentive and financing programs be modified? How should application forms, eligibility rules, underwriting processes, and outreach be adapted?
- How will new or adjusted programs be implemented?
- What is the budget?
- Can it reach the intended audience in the right timeframe?
- Will changes be permanent or temporary?
- Is sufficient staff available to run the program?
Additional questions to help policy makers sort through their priorities and options are also provided. The guidance document concludes with more than a dozen examples of specific state program approaches to small business recovery.
For more information and to access the full document, please see Guidance on Adjusting Discretionary Incentive Programs to Support Small Business Recovery.
This document is the second in a series. We also invite you to download the Guide to Help States Adjust Incentive Agreements in Response to the Economic Crisis (May 2020) and read our summary blog article.