Wayne County and the New Economy Initiative are teaming up to expand small business support with a combined $54 million investment.
The county is committing $32 million in American Rescue Plan Act funds to NEI to match $22 million in private foundation commitments. Those dollars will help put a small business support system in place throughout the county, helping to meet the needs in underserved communities including River Rouge, Ecorse and Inkster, replicating what NEI has done in Detroit.
The organizations announced the new small business support hub Wednesday morning during the Mackinac Policy Conference.
Contingent on approval of the Wayne County Commission, the federal dollars from the county mark the first public commitment to NEI, a foundation-led economic development effort, since its 2007 launch.
Private support for NEI’s match comes from commitments from the Community Foundation for Southeast Michigan, where it is housed, and other private funders, including Ford Foundation, Hudson-Webber Foundation, JPMorgan Chase, Kresge Foundation, Ralph C. Wilson Jr. Foundation, W.K. Kellogg Foundation and William Davidson Foundation.
“Outside of Detroit we’ve got 42 other communities, townships, cities and entities like the airport and other places that don’t have governments that have the ability to connect like a county can,” Wayne County Executive Warren Evans said. “Many of these communities are very well-managed … but they’re not going to be able by themselves create real substantive change without coordination and assistance. That’s what we see our role being.”
Small businesses are still reeling from the effects of the COVID-19 pandemic, including the tight labor market and inflation, Evans said. Neither government money nor philanthropic money can fix the issues by themselves, he said.
“I believe what we’re really teeing up here is the relationship between philanthropic organizations that together has enough expertise and enough money to make these things work and enough commitment to do it,” he said Wednesday at the press conference.
During the pandemic, it has become “painfully clear that many small business owners and entrepreneurs lacked access to the basic technical services and resources that are critical to starting or expanding a business,” said Wafa Dinaro, executive director of NEI.
The hub aims to make pathways to wealth generation through entrepreneurship more accessible to small business owners in Wayne County and help them recover, she said.
“The New Economy of Southeast Michigan must be inclusive, it must support small businesses, which are often overlooked in some of these larger programs,” she said. “And today’s announcement is really a step in that direction.”
Before joining NEI in February, Dinaro managed Wayne County’s distribution of just less than $80 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act grants and loans to support small businesses during the pandemic.
After the grants were distributed, the county reviewed the demographics of which businesses got money, Dinaro said. Detroit small businesses fared well because they had the ability to tap a technical support system stood up by NEI. Those nonprofit support organizations helped the small businesses with profit and loss statements, applications and getting their paperwork in order to apply for grants, she said.
Wayne County had really simplified the application process for small business support, she said, but it still found that some businesses in municipalities like River Rouge, Inkster and Ecorse were denied because they mixed business and personal accounts, because they couldn’t put together profit and loss statements and were not registered with the state.
The county had begun to build out a support system before her departure, Dinaro said. “As I transitioned to NEI, we talked with the county executive about doing this collaboratively so we’re not duplicating efforts and we’re all moving in the same direction.”
Dinaro’s work “gave the county comfort in many ways that she knew our vision,” Evans said.
“We wanted to be a solution to the problem, not just throw money at it.”
The Wayne County Small Business Hub, an online resource, will support new and existing small businesses with 50 or fewer employees, focusing on minority- and women-owned businesses with 10 or fewer employees.
The $54 million in public-private funding for the three-year initiative will fund grants to nonprofit business support organizations and chambers of commerce to connect recipients to technical assistance such as accounting, legal and marketing services or business plan development. The funding, administered by NEI, will continue to support nonprofits including ProsperUs, which is working with small businesses in Inkster, as well as Detroit, while also working to grow support capacity in Wayne County outside Detroit, Dinaro said.
“The work in Detroit doesn’t stop … we’re just expanding that model,” she said.
Though NEI does provide funding for small business support organizations in other parts of the region, such as the small business incubator Centrepolis Accelerator at Lawrence Technological University in Southfield, it has focused largely on Detroit in recent years.
“I think if we can do this and do this well, we absolutely will have the conversation to expand into other counties,” Dinaro said.
NEI and its funding partners “have had a lot of success in creating the small business support networks in urban centers, and we want to continue to grow that network,” she said.
“We have created a national model that continues to remove barriers and expand opportunities for entrepreneurs and small business owners who have been..historically excluded or shut out of the regular processes.”
The data shows that minority small business owners have wealth 12 times the level of their peers that don’t own businesses, said Melanca Clark, president and CEO of the Hudson-Webber Foundation.
“So this is a real strategy for addressing persistent wealth gaps in our nation,” she said.
COVID relief, particularly the Paycheck Protection Program loans from the U.S. Small Business Administration, almost none of it landed with our minority owned businesses, Clark said.
“The plain truth is that if we’re going to reach these businesses, we’ve got…to be really intentional about addressing deep-rooted, systemic barriers to access to capital, and accessing other resources…that help businesses survive and in fact thrive.”
Leaders tend to focus on how to add 1,000 more plant jobs or attract a company that will bring 2,000 jobs to the community, said David Egner, president and CEO of the Ralph C. Wilson Jr. Foundation. But 2,500 small businesses adding two jobs each is 5,000 new jobs.
“We’ve invested in attracting the big fish when we’ve got all these little fish that we can grow in a big way,” he said.
The first $100 million NEI invested in the small business support network produced more than $1 billion of output, Egner said.
Investing is startups is important, but so, too is investing in the “been ups,” the small businesses that have been there, anchored the corner, paid their taxes. hired people and preserved neighborhoods, Egner said.
“It’s more than just a notion of we’re going to we’re going to invest in small businesses,” said Egner. “It’s the notion that we’re going to maintain neighborhoods. We’re going to grow the economy, and we’re going to invest in folks who have been there and stay there and made it happen.”