The Governor's Office of economic and Economic Development (GO-Biz) today announced the California Rebuilding Fund, a brand new public-private partnership which Pacific Community Ventures is a part, that will leverage government backed capital to aid California's smaller businesses – particularly the smallest under-served firms and entrepreneurs from communities which have been historically disenfranchised.
The initiative was approved yesterday during the California Infrastructure and Economic Development Bank's (IBank) August board meeting. Before the approval, 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 consequently drive capital to Community Development Banking institutions (CDFIs) and other mission-based lenders that provide much-needed loans to California's underbanked smaller businesses. With the support of this new IBank funding, California's CDFIs improve their capacity to help smaller businesses recover and reposition themselves to survive the realities from the COVID-19 marketplace.
“Businesses across California happen to be devastated by COVID-19 and our smallest businesses happen to be the hardest hit,” said Governor Newsom. “Ensuring these businesses get access to capital will help jumpstart economic growth in communities over the state and provide needed support for entrepreneurs spending so much time to have their doors open.”
The California Rebuilding Fund may be the latest program supported by the State of California targeted at enhancing the state's smallest smaller businesses in reaction to the COVID-19 crisis. Additional small company support through the State includes:
- On April 2, Governor Newsom announced the state would allocate $50 million to IBank for any COVID Disaster Relief Loan Guarantee Program (DRLGP) that mitigates barriers to capital for those small businesses that don't be eligible for a federal disaster funds, including low wealth and immigrant communities. This program has since been expanded to include under-served businesses that might have received insufficient federal relief. In addition, the California Rebuilding Fund will also raise investment 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 from the Small Business Advocate (CalOSBA) with California's Office of Emergency Services (CalOES) have coordinated with six regional hubs to distribute free personal protective gear (PPE) to under-served and impacted small businesses throughout the state. Orders for delivery by 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 produce a supportive community to assist smaller businesses innovate and pivot during COVID-19.
- On July 8, California declared the month of July to be “California for those Small Business Month” and launched a new campaign, Calling ALL Californians: #ShopSafeShopLocal, to rally Californians to aid their local small businesses and help connect California's small businesses to digital tools and resources to help them get digital and adapt to the marketplace during COVID-19.
- The State of California has leveraged its supported network of 86 small company 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 ways of adapt. Their support in over 30 languages has been important to helping California smaller businesses survive.
Prior towards the COVID-19 pandemic, 4.1 million small businesses operated in the state, with people with less than 50 employees employing just over 40% of workers. The California Rebuilding Fund will emphasize supporting these smallest of smaller businesses, which have traditionally been underbanked and have difficulty accessing capital.
“IBank's Board of Directors approved this initiative to deal with a vital part of the California economy, by helping under-served smaller 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 before small businesses need access to capital and this innovative new public/private partnership program will assist those small businesses with needed funds to outlive and thrive,” said California State Treasurer Fiona Ma.
“Across multiple industries, COVID-19 has fundamentally changed day-to-day business operations. Small businesses happen to be highly impacted, yet they persevere and embrace change finding new methods to pivot and survive within this marketplace,” said Isabel Guzman, Director from 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 leaves 30 to 40% of California’s small businesses near failure. To prevent a wave of closures, small businesses need use of affordable and responsible capital. However, because of large gaps in available capital along with a system designed to naturally favor well-connected businesses, many of the smallest and most diverse businesses within our state are at risk of being left behind,” said Mark Herbert, V . p ., California at Small Business Majority. “If our economy is to recover, we should bridge this divide. Small Business Majority strongly supports this investment in the California Rebuilding Fund and applauds the IBank to take action to ensure that small businesses possess the resources they require during this time of crisis.”
“If we do not move 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 along with other investors. This effort will enable mission-based lenders like Opportunity Fund to supply financing and advising to entrepreneurs to restart, regenerate and rebuild California's Main Street economy.”
The COVID-19 pandemic and efforts to mitigate multiplication from the virus have presented extraordinary challenges for California's small businesses. Smaller businesses across the state have increased to safeguard their employees and customers with innovations that satisfy the moment.
