The SBA Needs To Get It’s Act Together On The PPP
The SBA’s implementation of the Payroll Protection Program (PPP) has been a mess. The intention was to provide needed relief to businesses that were impacted economically by the COVID-19 crisis. But, while very well-intentioned, it’s implementation has been flawed. In particular, the SBA has given inconsistent guidance that continues to change and evolve, leaving companies left to wonder if they qualify or not. The result has been not just confusion but also job losses that were likely not what Congress intended the program to result in. …
May 10, 2020· 8 min read
The Changing Nature of Entrepreneurship | EforAll
Entrepreneurship in the United States is changing pretty dramatically – in ways that many of us have failed to notice or understand. Specifically today’s American entrepreneurs are more likely to be female and non-white. In fact, the number of women-owned businesses has increased 31 times between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). Meanwhile, the fastest-growing group female entrepreneurs are women of color, who are responsible for 64% of the new women-owned businesses being created. There’s a lot more to dig into here, which I’ll do in future posts. But it’s urgent that we begin to understand this because we’re failing to build systems to support these new entrepreneurs. This has become especially clear in the current economic crisis, as I pointed out in this piece I wrote with Elizabeth Macbride a few weeks ago for CNBC as well as this post from last week. Relief money authorized by congress under various programs of the CARES Act and other initiatives is failing to reach many women and minority owned businesses and is highlighting structural issues with the way we support entrepreneurs in the United States. For example, it has been widely documented that women and minority owned businesses are not accessing aid through the Payroll Protection Program (PPP) – see for example, here, here, here, here, [here](http://Small-business loan program discriminates against women …www.marketwatch.com › story › small-business-loan-pro…). This program requires businesses to have relationships with certain approved SBA lenders, which women and minority owned businesses are less likely to have. Its initial roll-out excluded certain types of financial institutions (most notably CDFIs) which disproportionately bank these businesses. It also left much of the underwriting criteria up to the banks themselves, who favored other customers. And the program itself – based on W2 payroll and primarily benefiting businesses that were in a position to open up quickly – failed to address the kinds of businesses most likely to be started by this new generation of entrepreneurs. …
May 6, 2020· 5 min read
Colorado is Opening Up. Foundry is not. Here’s our Thinking.
In mid-March, I wrote a post about how Foundry Group had joined a number of other businesses in the early adoption of work from home and other practices to stem the spread of COVID-19. We recognized that this would be an essential part of helping create social distance and by doing so, flattening the curve. As Colorado and many other states are moving to a more relaxed set of policies (although Denver and Boulder are waiting a few more weeks until they follow the rest of the state), we’ve decided that for Foundry we’ll continue our work from home policy until at least the end of May (Brad’s post on that here). We’re doing this because we’re in the fortunate position where we can and we’re being public about it because we’re hoping other businesses that are in a position to do so will do the same. We’re fortunate at Foundry to operate the kind of business that works well remotely and although we miss seeing each other in the office and the natural collaboration that happens when we’re all there, our business functions pretty much normally even when we’re all remote. And, like other businesses, we’ve been very deliberate about trying to replicate our in-office dynamic online (for us that includes several weekly stand-ups, extended time together on Mondays as well as ad hoc “cocktail/mocktail hours”. We also recognize that there are many businesses that need to open up sooner and we feel that they should take priority over companies like Foundry that can continue working from home without big disruptions to our operations. …
May 4, 2020· 2 min read
We’ve helped over 150 small businesses navigate the crisis | Here’s what we’ve learned
I wrote recently about the The Finance Assistance Network (FAN), that I helped set up (along with Lew Visscher and Phil Votteiro) three weeks ago to offer pro bono financial advice to small businesses affected by COVID-19. So far the network has helped almost 200 companies navigate questions around surviving in the post-Covid work and to access PPP and other federal assistance. Tomorrow (Friday, May 1) at 9:00MT the FAN is hosting a webinar – Extending Your Runway: Small Business Tools to Survive a Cash Flow Crisis. The webinar is hosted by Good Business Colorado and is sponsored by a number of organizations advocating for small businesses including MAPR Agency, The Bell Policy Center, Small Business Majority, and others. The webinar is free and you can register here. I’m encouraging everyone to share the information about the webinar and the FAN on their social media channels and especially with small business owners in their networks. Supporting small businesses during this crisis is crucial to the overall health of our economy so please spread the word about these free resources. …
April 30, 2020· 5 min read
The Week 6 Slump
I wrote a couple of weeks ago about settling in and some of the challenges of accepting what is now our new normal. Covid-19 has completely upended everyone’s life and created a massive amount of uncertainty. But, at the time, I wrote that it felt like things were starting to settle in – that many were getting used to their new routines and accepting, if not embracing, the lack of clarity around the future. Rolling forward to this week and it feels like this has changed a bit – at least temporarily. During a number of conversations this week, I’ve noticed a difference in how people are feeling, and to the acceptance that I think most of us had internalized up until now. …
April 29, 2020· 3 min read
PPP and Women and Minority-Owned Businesses – We Need To Do More
I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of women-owned businesses has increased 31 times between 1972 and 2018 (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%), according to the Kauffman Foundation. But the aid programs are largely failing to address the needs of these key entrepreneurial communities and the PPP loans are not getting broadly distributed across these demographics. The pressure on Main Street entrepreneurs is being compounded by the current economic crisis in ways that we haven’t even begun to wrap our heads around. Businesses started by women and minorities are more likely to have been impacted by the crisis and we fear will be the last to recover from it. According to the Center for Responsible Lending, a large majority of Black, Latino and other minority-owned businesses stand close to no chance of receiving a PPP loan through an SBA-approved bank or credit union. With loan sizes pegged to payroll, women and minority-owned businesses – which on average employ fewer people and as a result have smaller payrolls – are being de-prioritized by the banks that are the gatekeepers of the program. Compounding this problem, women and minority-owned businesses are also more likely to use contract or 1099 labor, which the PPP loan calculations exclude for purposes of calculating eligible loan size. And more fundamentally, these entrepreneurs are less likely to bank with an SBA approved lender. Even when they do bank with an SBA lender, there is evidence that these lenders are favoring their larger “small business” clients (for example, the average loan size in the initial PPP program was over $200k, representing businesses with payroll of around $1M / year). …
April 27, 2020· 4 min read
Extending and Expanding Aid – Some Policy Ideas
I was recently asked to put together some ideas for consideration for the next economic package that congress is currently working through and which I hope will both extend existing programs put in place to dampen the blow of the economic crisis brought on by Covid-19 but also extend that aid to critical areas of the economy that aren’t yet being supported by current programs. I touched on some of the issues in two OpEd pieces I co-authored with Elizabeth Macbride in the last two weeks (here and here in case you missed them). There wasn’t space in those to really flesh out a number of ideas that I think are worth thinking about, and I was only in the process at that point of putting this together. I leaned on a number of people for their advice to come up with what I describe in more detail below. Specifically I’d like to thank Doug Rand, Delaney Keating and Dan Caruso for their input. I’ve had some discussions about this with members of congress and am hopeful that at least some of these ideas will be considered in the upcoming 4th aid package. I’d love your feedback (as well as other ideas). I have an ongoing line of communication in congress about these and other ideas. Overall, despite the size and scale of the existing aid packages, I think more needs to be done to help prop up the economy and especially to target some of the businesses that need and deserve help but are being left behind by the current programs. …
April 19, 2020· 6 min read
What Policymakers Don’t Understand About Small Business
Entrepreneurship in the United States has been changing in ways that many people have not yet recognized. I’m working on a much more extensive piece on these changes (and have been for some time – more on that project in a future post) but as the Covid-19 crisis took root, it became clear to me and my writing partner, Elizabeth Macbride, that policy-makers fail to understand the nature of entrepreneurship and small business in America (from the composition of entrepreneurs to the types of businesses they are starting to the rise of the “gig” economy) and that this failure was causing them to miss the mark on programs they were implementing to help. Last week, Elizabeth and I wrote an OpEd published on CNBC that describes the confusing landscape that businesses face trying to navigate the federal aid landscape. Earlier this week we penned a follow-up that describes at a high level some of the changes in the American entrepreneurial landscape as well as the ways in which policy can and must be adapted to keep pace. The text of our latest OpEd is below. …
April 16, 2020· 7 min read
Settling In
As we enter week 5 (yes – I had to go back to my calendar and count) of our Covid-19 self-quarantine I find myself alternating between the comfort of my new routine and the uncertainty of not knowing when this will all be over. And for that matter, what “over” in this context means (How quickly will things return to some sense of pre-quarantine normalcy? Is that even possible at this point? What things from my new quarantine life will I miss? Will we be out and about too soon and have to shelter in home again as the virus spikes back up?). It’s a lot to take in. …
April 13, 2020· 4 min read
SBA PPP Loans Aren’t for Everyone
There’s a healthy debate going on right now at many VC firms about whether venture-backed companies should apply to the SBA’s Payroll Protection Program (The Information had a good article on this yesterday (paywall), and Albert Wenger from Union Square Ventures put up an excellent post on the subject here). This program is designed to help businesses struggling with the Covid-19 crisis retain employees and pay for critical infrastructure (specifically rent, mortgage and utilities). I wrote an OpEd piece for CNBC yesterday with Elizabeth Macbride that outlined a number of ways that the program, as currently implemented, is failing to reach many of the businesses it was intended to support. The program is complicated, being implemented through only a subset of the banking sector, is being interpreted differently by different banks, and has a loan forgiveness formula that leaves out many critical businesses that are in desperate need of the money (specifically restaurants and hospitality businesses). …
April 7, 2020· 6 min read