Small Businesses Need Support During COVID-19 Pandemic

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By Scott Wu, Special at CalMatters

Scott Wu is Executive Director of California Infrastructure and Economic Development Bank, IBank, [email protected]

Alicia Villanueva started making 100 tamales a night and sold them door-to-door before finally realizing her dream of opening her own restaurant. Eventually, she was selling tens of thousands of her tamales, serving Google and Facebook, and expected 2020 to be her most profitable year.

Then the pandemic struck, she lost 95% of her business and returned to door-to-door selling with her husband and son in hopes of keeping her staff employed. It has secured some funding, but not enough to maintain its staff and pivotal operations to stay open.

Recently Alicia’s Tamales Los Mayas was the 1,000e company served by IBank as part of a fundraising initiative launched last April to support small businesses that have been severely affected by the COVID-19 health and economic crisis and that do not have access to federal relief funds enough. “The loan could not have come at a more important time because it allows us to stay in business and better serve our community,” said Alicia.

These 1,000 companies employ 5,000 Californians and the goal is to provide affordable financing to help them pivot to serve customers safely and protect employees as they navigate this crisis. This new initiative is in addition to the many small businesses supported by IBank’s traditional activities.

IBank is historically known for its affordable infrastructure and economic development funding for municipalities and other eligible organizations. Since 2015, IBank has provided nearly $ 300 million in loans and issued nearly $ 8 billion in bonds, creating jobs and improving communities statewide.

The Small Business Finance Center has been with IBank since 2013 and has supported over $ 1 billion in loans and nearly 100,000 jobs through its funding programs since moving to IBank.

Everything IBank has done since its inception in 1994 has become more critical during the pandemic – especially supporting small businesses, which is why the Governor and Legislature allocated funds to IBank last year to the first time since its initial capitalization in 1998 and 1999. Net of transfers shortly thereafter, IBank only used $ 162 million of appropriate general funds in its first 25 years.

With the limited capital provided so many years ago, and by funding operations from revenues, IBank was able to provide municipalities $ 800 million in direct loans, issue $ 40 billion in infrastructure and development bonds. economy, including $ 2 billion for green projects, and supporting $ 1.6 billion in small business loans. This investment has supported job creation through economic development and community investment projects and helped residents across the state create their version of the California dream.

The budget proposal for the next fiscal cycle includes a request for $ 100 million to be allocated to the Small Business Financial Center for programs supporting businesses in particular need, and $ 97 million to IBank’s Climate Catalyst fund to fund. climate-smart agriculture and forest resilience.

Our COVID-19 guarantees and the all-new California Rebuilding Fund are helping California businesses, 84% of which are owned by women, minorities, or located in low to moderate income neighborhoods. Yes, we would expect there to be some defaults. But we also predict that many businesses will not only survive these economic hardships, but grow and prosper as they adjust to the new normal.

The money allocated to IBank is not an expense that requires an annual replenishment, but an investment that pays off both financially and to our communities, generating future funds to continue supporting state goals.

Whatever the amount, rest assured that these allocations to IBank will be managed responsibly and take advantage of multiples of private sector capital, and that repayments will rotate and rise in perpetuity to continue to have a bigger future impact, like IBank. has done so over the past two decades.

An investment in IBank is an investment in California, just ask Alicia.

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