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Thread: Creating need-based criterion for local small business assistance program

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    moderator in moderation Suburb Repairman's avatar
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    Creating need-based criterion for local small business assistance program

    My city recently had to scrap a downtown business assistance program due to some compliance issues with state law as well as perceived abuse by some property owners. We're building a much better program that we hope will produce better results in terms of improved built environment, number of businesses & job creation. We would like to create a criterion for this program to consider the financial ability of the applicant starting/expanding the small business. I'm thinking something similar to the Small Business Administration's criteria for economic & social disadvantage found in 13 CFR 124.103 and 13 CFR 123.104 (linky for convenience). However, our program is not going to be dealing in large amounts of money and I don't want potential applicants to get bogged down or intimidated by paperwork & documentation.

    Here's what I'm thinking of currently

    Economic Disadvantage: Demonstrate all of the following
    • Estimated fair market value of assets owned – less than $_____
    • Personal net worth information (assets & liabilities) – net worth less than $_____
    • Individual tax return and business tax return (if applicable) for prior year (must include spouse as well if married) – personal income not exceed $______

    I have no idea what is really appropriate for the thresholds.

    Social Disadvantage: Demonstrate disadvantage as follows
    • Identified as a presumed socially disadvantaged person: Black, Hispanic, Native American, Asian Pacific, Subcontinent Asian
    • If not presumed, provide evidence of social disadvantage to include all of the following: At least one objective distinguishing feature such as race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged; Personal experiences of substantial and chronic social disadvantage in American society, not in other countries; Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s).

    Any thoughts or suggestions? We're probably talking about a 50/50 matching grant up to $20,000 or so.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

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    Cyburbian Cardinal's avatar
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    Unless required by state law, these conditions may not really address the true need, which is to fill vacant space and rehab existing buildings (I assume). Take income as an example. One person may make $100,000 a year and plan to open a restaurant. The next person may make $50,000 and plans to open an insurance office. Using income as a criteria would tend to favor the second person, whose costs of opening that business are a fraction of the average $500,000 it costs to open a restaurant. Who is in more need of assistance and which business is better for downtown? Having done a few of these programs, I would usually recommend evaluating things like:

    1) Desirability of the business - is this the kind of business that is being targeted in this location?
    2) Probability of success - does the applicant have a sound business plan and experience, as well as the resources to sustain the business while it grows?
    3) Improvements to the building - do the repairs address known mechanical or structural issues, or are facade improvements in keeping with guidelines?
    4) Overall impact - is this new business going to be an enhancement to the district?
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    Super Moderator kjel's avatar
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    Quote Originally posted by Cardinal View post
    Unless required by state law, these conditions may not really address the true need, which is to fill vacant space and rehab existing buildings (I assume). Take income as an example. One person may make $100,000 a year and plan to open a restaurant. The next person may make $50,000 and plans to open an insurance office. Using income as a criteria would tend to favor the second person, whose costs of opening that business are a fraction of the average $500,000 it costs to open a restaurant. Who is in more need of assistance and which business is better for downtown? Having done a few of these programs, I would usually recommend evaluating things like:

    1) Desirability of the business - is this the kind of business that is being targeted in this location?
    2) Probability of success - does the applicant have a sound business plan and experience, as well as the resources to sustain the business while it grows?
    3) Improvements to the building - do the repairs address known mechanical or structural issues, or are facade improvements in keeping with guidelines?
    4) Overall impact - is this new business going to be an enhancement to the district?
    I agree. You don't want to be throwing away precious resources on something that doesn't have a sound business plan. Perhaps make it a scored model type of application. If you are interested in supporting minority business entrepreneurship or low-moderate income owned business you could add an additional point for either of those criteria. Typically around here the minority/socially disadvantaged definition includes: Black, Hispanic, Asian, Native American, Women, and Physically Disabled. The economic disadvantaged is usually defined as a person whose household income is at or below 80% of the Area Median Income as defined by HUD.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

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    moderator in moderation Suburb Repairman's avatar
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    Quote Originally posted by kjel View post
    I agree. You don't want to be throwing away precious resources on something that doesn't have a sound business plan. Perhaps make it a scored model type of application. If you are interested in supporting minority business entrepreneurship or low-moderate income owned business you could add an additional point for either of those criteria. Typically around here the minority/socially disadvantaged definition includes: Black, Hispanic, Asian, Native American, Women, and Physically Disabled. The economic disadvantaged is usually defined as a person whose household income is at or below 80% of the Area Median Income as defined by HUD.
    Sorry... I should have clarified... we are moving this program in the direction of a scored model. The social disadvantage & economic disadvantage would be a couple out of several criteria, including business plan viability, type of improvements and targeted business types. We've also talked about a criterion for veteran-preference (I'm trying to lump Peace Corps & National Service in with it).

    Our problem had been property owners downtown that were using a very loose assistance program as a funding source for maintenance even though they had the income & means to do it on their own easily. Plus, we weren't getting any job creation/retention or clear economic benefit (the old program we inherited had really poor guidelines). We're addressing the types of eligible projects of course, but we also want to give some thought to people starting businesses that have faced obstacles. We have a really great partnership with a nearby university that helps people with business plans, so there isn't any excuse for a business owner not to have a good one.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

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