The COVID-19 crisis is on course to be the greatest economic shock since the Great Depression. Experts have identified significant challenges, sparked by the pandemic, for small businesses, which are often the heart of local economies and community life in America.
“The pandemic has reminded us of the outsized role small businesses play in our economy, employing 47% of the U.S. workforce, generating two-thirds of new jobs, and serving as a critical path to economic self-sufficiency,” said Bruce Katz, JD, distinguished fellow in the Lindy Institute for Urban Innovation and director of the Nowak Metro Finance Lab at Drexel University. “But the pandemic has also revealed not only the fragility of many of these enterprises, but profound deficiencies in how they are supported by federal policies, private practice, and local action.”
Earlier this week, the Nowak Metro Finance Lab at Drexel University and Yale University’s Institution for Social and Policy Studies, released a report that calls for additional emergency measures to stabilize small businesses, as well as systemic change in the way small businesses gain access to the capital, customers and services they need to succeed.
In this report, the group identifies five steps that together form a roadmap toward a more inclusive, dynamic and productive small-business sector:
(1) First, come January 2021, the federal government must forcefully respond to the COVID-19 crisis by providing debt relief and long-term loan products.
(2) As the economy normalizes, the federal government, in partnership with states, can unleash the entrepreneurial spirit of the U.S by reducing barriers to entry, leveling the playing field so small businesses can compete against incumbents and giving entrepreneurs tools they need to succeed.
(3) To ensure the long-term vitality of small businesses, the federal government should shape a financial system that works for Main Street by strengthening independent banks and community financial institutions and expanding the range of federally backed debt and equity products available to entrepreneurs of all stripes.
(4) But these steps will not be enough for minority small business owners, who struggle uphill against deficits of social and financial capital. To accelerate the growth of minority-owned businesses, especially Black and Latinx owned businesses, we call for a dramatic expansion in both public and private procurement from minority-owned small businesses.
(5) You can’t manage what you can’t measure. We must collect more and better data on the performance of the small business sector generally and specifically the impact of current and new government programs so that we can evaluate for continuous improvement.
Read the full report, here: “A five-step roadmap for rebuilding the U.S. small business sector, reviving entrepreneurship, and closing the racial wealth gap.”
Media interested in speaking with Katz can contact Emily Storz at els332@drexel.edu or 215-895-2705.