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Small Business Grant Program Proposed Modifications Approved by the Community Development Advisory Commission Copyrighted August 7, 2023 City of Dubuque Action Items # 01. City Council Meeting ITEM TITLE: Small Business Grant Program Proposed ModificationsApproved bythe Community Development Advisory Commission SUM MARY: City Manager recommending City Council approval of changes to our existing small business grant program in response to evolving small business needs and entrepreneurial ecosystem development that have been presented to and approved by the Community Development Advisory Commission. SUGGESTED Suggested Disposition: Receive and File;Approve DISPOSITION: ATTACHMENTS: Description Type MVM Memo City Manager Memo Staff Memo Staff Memo Purpose and Requirements Supporting Documentation Income Guidelines- CDBG Supporting Documentation Income Guidelines-ALICE measure Supporting Documentation Fountain of Youth Program Curriculum Supporting Documentation Eligible E�enses Supporting Documentation Dubuque THE CITY QF � All-Meriea Ciry DLT B E ; . � . � �� � � MaSt� Z�C� aYd t�Q Mt55ZSSZ Z zoa�•zoiz•�ai3 YP pp za��*zai� TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Small Business Grant Program Proposed Modifications Approved by the Community Development Advisory Commission DATE: July 26, 2023 Economic Development Director Jill Connors is recommending City Council approval of changes to our existing small business grant program in response to evolving small business needs and entrepreneurial ecosystem development that have been presented to and approved by the Community Development Advisory Commission. Over time, both City and Fountain of Youth staff have continued to evaluate and improve the program design and through collaboration have identified new funds to enhance the program. City staff are currently participating in a National League of Cities "Cities of Opportunity" program to accelerate our entrepreneurial ecosystem through the creation of a hub and spoke model. The NLC program provides $15,000 to implement an ecosystem accelerator activity. This pairs with a $400,000 grant received by The Innovation Lab (from County ARPA funds) which are also dedicated to the creation of a hub and spoke model. The Innovation Lab is acting as the hub and is utilizing the $15,000 to put together the infrastructure needed to bring ongoing capital to seed-stage and launch-stage businesses. Both City and Greater Dubuque Development Corporation staff are also participating in an "Economic Mobility and Opportunity" program through the International City Management Association (ICMA), focused on boosting upward mobility in local communities. The program is providing $30,000 to address workforce preparation and training issues as well as being used for small grants to area entrepreneurs, including minority-, women-, disabled-, and LGBTQ-owned businesses. $9,000 of the stipend will be directed to marketing the Opportunity Dubuque program (NICC job training program), with a goal of doubling program completions. $21,000 will be programmed to provide additional small business grants. The planned approach is to run the small business grant program with a cohort comprised of both low- to moderate-income (LMI) participants and non-LMI participants — using funds from the two different sources (CDBG and ICMA) assigned to the participants based on how they qualify for the program. Our goal is to assist businesses with a true need for capital, not those with well-established access to capital. To that end, we propose an eligibility criterion for the ICMA funds be a business which nets the owner less than a living wage for the owner's household (as defined by the United Way's "Asset Limited, Income Constrained, Employed", or ALICE, calculations), regardless of total household income. In this way the program supports businesses which would not provide their owner with a living wage. We believe the goal of our programs should be to create businesses that allow the owner to have their business be their sole source of income. This funding-source appropriation happens behind the scenes; the program will be identical for the participants, including the technical assistance requirements and the eligible expenses under the grant. Covered expenses are only those allowed under CDBG regulations. One modification we also propose is to increase the grant amount to $5,000 instead of the current$3,000. We have remaining funds from this fiscal year, and $50,000 of CDBG funding is budgeted for FY2024. With the total available funds, taking into consideration the increase to a $5,000 grant, we will be able to serve up to 13 businesses owned by LMI individuals and up to 4 non-LMI individuals during the fiscal year. We will also be updating our data gathering before, during, and after the program to measure the impact of the program. This proposal was presented to the Community Development Advisory Commission at its July 19, 2023, meeting. Staff answered several questions from the commissioners. Due to a lack of quorum, and email vote was taken the following days in which the Commission approved the proposed changes. I concur with the recommendation and respectfully request Mayor and City Council approval. � Mic ael C. Van Milligen MCVM:sv Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Jill Connors, Economic Development Director Anderson Sainci, Director, Office of Shared Prosperity & Neighborhood Support 2 Dubuque Economic Development Department THE CITY OF �' S0 West 13th Street All•AmericaEiry Dubuque,lowa 52001-4864 U� � �;����'` r,N � ` Office(563)589-4393 TTY(563)690-6678 1 I I�' http://www.cityofdubuque.org Masterpiece on the Mississippi 2017*2019 TO: Michael C. Van Milligen, City Manager FROM: Jill M. Connors, Economic Development Director SUBJECT: Small Business Grant Program Proposed Modifications Approved by the Community Development Advisory Commission DATE: July 21, 2023 INTRODUCTION This memorandum presents proposed changes to our existing small business grant program in response to evolving small business needs and entrepreneurial ecosystem development that have been presented to and approved by the Community Development Advisory Commission. BACKGROUND On December 20, 2017, the Community Development Advisory Commission approved the allocation of $150,000 to the Economic Development Department to provide microloans to entrepreneurs and budding businesses. The focus of the program was the Central Avenue Corridor and our minority population. Three microloans of $35,000 each were provided to income-eligible entrepreneurs to start up their businesses. This left a balance of $45,000 in the allocated fund. In 2019, the Community Development Advisory Commission approved a proposal to pilot a $1,500 Business Assistance Stipend for income-eligible individuals who were working toward starting a business. The Commission subsequently approved an amendment to the level of stipend from $1,500 to $3,500 in order to better assist the companies. $3,000 was directed to the participant in the form of a grant, and $500 per participant was allocated for administration of the program. For this program, we have partnered with the Fountain of Youth, which provides personal development programming, as well as holding the individual accountable for their progress. These technical assistance services helped the participants advance toward getting their business fully operational. In early 2020, the COVID-19 pandemic caused this program to completely stall, as the business startup training previously available (lowa Venture School) was put on hold. In partnership with Fountain of Youth, we reprogrammed the funds to focus on existing businesses that were struggling to keep their doors open. Fountain of Youth again administered the program and provided the wrap around/technical assistance services. The technical assistance requirements served two purposes: 1) short term assistance to keep the business afloat while the economy inched back toward a recovery, and 2) positioned the business owner to improve their business over the long term due to the personal and professional development activities required to remain eligible for the funds. (Studies show that small business owners who receive three or more hours of mentoring report higher revenues and increased growth.) DISCUSSION Over time, both City and Fountain of Youth staff have continued to evaluate and improve the program design and through collaboration have identified new funds to enhance the program. City staff are currently participating in a National League of Cities "Cities of Opportunity" program to accelerate our entrepreneurial ecosystem through the creation of a hub and spoke model. The NLC program provides $15,000 to implement an ecosystem accelerator activity. This pairs with a $400,000 grant received by The Innovation Lab (from County ARPA funds) which are also dedicated to the creation of a hub and spoke model. The Innovation Lab is acting as the hub and is utilizing the $15,000 to put together the infrastructure needed to bring ongoing capital to seed-stage and launch- stage businesses. Both City and Greater Dubuque Development Corporation staff are also participating in an "Economic Mobility and Opportunity" program through the International City Management Association (ICMA), focused on boosting upward mobility in local communities. The program is providing $30,000 to address workforce preparation and training issues as well as being used for small grants to area entrepreneurs, including minority-, women-, disabled-, and LGBTQ-owned businesses. $9,000 of the stipend will be directed to marketing the Opportunity Dubuque program (NICC job training program), with a goal of doubling program completions. $21,000 will be programmed to provide additional small business grants. The planned approach is to run the small business grant program with a cohort comprised of both low- to moderate-income (LMI) participants and non-LMI participants — using funds from the two different sources (CDBG and ICMA) assigned to the participants based on how they qualify for the program. Our goal is to assist businesses with a true need for capital, not those with well-established access to capital. To that end, we propose an eligibility criterion for the ICMA funds be a business which nets the owner less than a living wage for the owner's household (as defined by the United Way's "Asset Limited, Income Constrained, Employed", or ALICE, calculations), regardless of total household income. In this way the program supports businesses which would not provide their owner with a living wage. We believe the goal of our programs should be to create businesses that allow the owner to have their business be their sole source of income. This funding-source appropriation happens behind the scenes; the program will be identical for the participants, including the technical assistance requirements and the eligible expenses under the grant. Covered expenses are only those allowed under CDBG regulations. One modification we also propose is to increase the grant amount to $5,000 instead of the current $3,000. We have remaining funds from this fiscal year, and $50,000 of CDBG funding is budgeted for FY2024. With the total available funds, taking into consideration the increase to a $5,000 grant, we will be able to serve up to 13 businesses owned by LMI individuals and up to 4 non-LMI individuals during the fiscal year. We will also be updating our data gathering before, during, and after the program to measure the impact of the program. This proposal was presented to the Community Development Advisory Commission at its July 19, 2023 meeting. Staff answered several questions from the commissioners. Due to a lack of quorum, and email vote was taken the following days in which the Commission approved the proposed changes. RECOMMENDATION/ ACTION STEP I respectfully request concurrence to proceed with the proposed modifications to the small business grant program. Cc: Cori Burbach, Assistant City Manager Anderson Sainci, Director, Office of Shared Prosperity & Neighborhood Support Dubuque Economic Development Department THE CITY OF ' ' S0 West 13th Street All-America City Dubuque,lowa 52001-4864 U� � n'�N",`�""""�� Office(563)589-4213 � � TTY(563)690-6678 � http://www.cityofdubuque.org 2007*2012•2013 Masterpiece on the Mississippi zai�*zoi9 LMI SMALL BUSINESS GRANT PROGRAM PURPOSE, ELIGIBILITY, AND REQUIREMENTS Purpose The City of Dubuque is a recipient of federal Community Development Block Grant (CDBG) funds from the Department of Housing and Urban Development (HUD), which must be used to support a national objective, one of which is to provide economic development benefit to low- and moderate-income (LMI) households and areas. A business may qualify for a grant up to $5,000 if all eligibility and qualifying requirements are met. There is no guarantee that a business will be funded. The purpose of this grant is to help businesses succeed over the long term. Part of succeeding is not just covering current expenses with a grant, but also to develop strategies for continued success. The qualifying requirements are meant to provide ongoing support to the business owner in the owner's efforts to improve business practices and increase income. Eligibility • The applicant must live inside the city limits of the City of Dubuque. • The business must have fewer than five (5) employees. • The business must have been operational for at least (twelve) 12 months before application. • The applicant must have filed their 2022 personal and business income taxes. • The applicant must be an individual from a low- to moderate-income household. (Some exceptions apply for individuals with lower net income from the business despite total household income.) • The participant must participate in at least 8 personal development sessions at Fountain of Youth beginning with a kickoff event on September 21, 2023, with workshops starting on September 28, 2023. At least 2 professional development sessions with a business mentor are also required. 1 Application Process The application can be found online at: https://www.cityofdubuque.orq/101/Economic-Development The following documentation is needed to process an application: • Application • 2022 business and personal tax returns of all household members, with copy of W-2s and 1099's if applicable. • Proof of business's active status (found on Secretary of State website) • Driver's license or other form of photo identification Note: Additional items may be requested for approval. Qualifying Requirements • The participant must engage in at least eight (8) 45-60-minute meetings with staff from Fountain of Youth to set individual and/or professional goals and learn skills needed to succeed in business. • The participant must engage in at least two (2) meetings with a business mentor (i.e., SCORE, SBDC, or similar) to review current business practices and gain additional skills to improve the owner's business. The business owner must sign a waiver permitting the business mentor to confirm meetings were held. • The participant must provide an update on the business, such as persons served by the business and general information on outcomes identified during mentoring sessions, within 3 months of finishing the program. Timeline/Availability Applications will be evaluated, and decisions issued in the order completed applications are received beginning August 15, 2023 and through September 15, 2023 or until funds are depleted, whichever comes first. Additional rounds of funding are expected in 2024. Use of Funds Funds may only be used for documented, eligible expenses listed on Attachment C. Any questions about eligibility should be addressed to Economic Development Director, Jill Connors at jilconno(c�cityofdubuque.orq (563-564-5686) Reimbursement Process The grant will provide up to a total of $5,000 in exchange for proof of eligible expenses and meeting the qualifying requirements. 2 All reimbursement requests will be submitted directly to Fountain of Youth staff and reviewed for eligibility. The participant must use the reimbursement form provided to track expenses in order to facilitate the processing of the payment. **Please address all questions to Jill Connors, Economic Development Director for the City of Dubuque at: jilconno(a�cityofdubuque.orq (563-564-5686) 3 REQUIRED MENTORING DOCUMENTATION Name: Business Name: Date Topic/Goal Discussed Owner FOY Initial Initial Date Business Mentor - Owner Mentor Goal Discussed Initial Name 4 CITY OF DUBUQUE, IA INCOME GUIDELINES FOR FINANCIAL ASSISTANCE Income limits are defined and occasionally revised by the U.S. Department of Housing and Urban Development's estimated median family income. A moderate-income person or family has a total income which falls between the fifty (50) percent and eighty (80) percent median for the area, adjusted for size. A low-income person, family, or household has a total income which falls between thirty (30) and fifty (50) percent of the median income, adjusted for size, of the metropolitan area. An extremely low-income person, family or household has a total income which is between zero (0) and thirty (30) percent of the median income, adjusted for size, of the metropolitan area. The maximum income limits as of June 15, 2023 for the Dubuque Metropolitan Statistical Area are as follows: Household Below 30% AMI Below 50°/a Below 80% Above 80°/a Size AMI AMI AMI Family Size 1: <$19,500 <$32,450 <$51,900 >$51,900 Family Size 2: <$22,250 <$37,050 <$59,300 >$59,300 Family Size 3: <$25,050 <$41,700 <$66,700 >$66,700 Family Size 4 <$27,800 <$46,300 <$74,100 >$74,100 Family Size 5: <$30,050 <$50,050 <$80,050 >$80,050 Family Size 6: <$32,250 <$53,750 <$86,000 >$86,000 Family Size 7: <$34,500 <$57,450 <$91,900 >$91,900 Family Size 8: <$36,700 <$61,150 <$97,850 >$97,850 Income limits for CDBG funded programs can be found on the HUD Exchange https://www.hudexchange.info/resource/5334/cdbq-income-limits/ Organizations required to verify income are encouraged to use the CPD Income Eligibility Calculator at https://www.hudexchanqe.info/incomecalculator/ Living Wage in the City of Dubuque, 2022 � - - • - ` • • - ' • • - • ` • • • ` • • • • • • - • • : • • • Housing $554 $634 $834 $834 Child Care $0 $612 $0 $1 ,242 Food $295 $399 $870 $870 Transportation $393 $529 $1 ,067 $1 ,067 Health Care $321 $596 $1 ,051 $1 ,051 Technology $60 $60 $100 $100 Miscellaneous $163 $269 $498 $498 Taxes $322 $458 $865 $865 Monthly Total $2,108 $3,558 $5,285 $6,527 Annual Total $25,299 $42,702 $63,425 $78,329 Hourly Wage $13.18 $22.24 $33.03 $20.40 (x2) / $40.80 Career and Professional Development: Entrepreneur Track Week 1: Personal Development Week 5: Customer Service • Communication:verbal, non-verbal,written,visual • Communication skills continues • Interpersonal skills • Patience • Organizational skills • Active listening • Problem solving • Conflict resolution • Self confidence • Decision Making • Adaptability • Dependability • Integrity • Knowledge of product and services • Work ethic • Open mindedness • Leadership • Responsiveness • Timeliness Week 2: Goal Setting Week 6: Human Resources • Short term vs long term • Personal goals: advancing your interest • Recruitment • Professional goals • Onboarding • SMART goals used • Employee benefits � Make goal as clear&detailed as possible • Act as an intermediary � How will you measure success? • Training and development � Are they achievable? • Legal compliance � Is it relevant? � Set a beginning&ending date Week 7: Networking Week 3: Marketing(4 P's) • Online groups • Product • Professional associations • Price • Casual contacts • Promotion • Community service clubs • Place � Choose what works best for you � Identify products and services � Make genuine connections � Identify your customers � How can you contribute to the relationship? � Ask questions � Stay consistent � Define your marketing mix � Continue to build your network � Test your work � Review regularly Week 8: Self Care& Personal Growth Week 4: Budgeting . Work/life balance • Calculating income • Assess your personal needs • Calculating expenses • Achieve a balance that works for you • Set goals • Find something you love • Choose a budget strategy(envelope system) � Control anger • Adjust your habits � Overcome urger to procrastinate • Automated banking(QuickBooks) � Take time to be there for you • Track your progress � Break habit of laziness � Learn to be considerate • Developing sample budget � Learn to be responsible � Develop skills and always learn � Positive attitude Dubuque Economic Development Department THE CITY OF ' ' S0 West 13th Street All-America City Dubuque,lowa 52001-4864 U� � n'�N",`�""""�� Office(563)589-4213 � � TTY(563)690-6678 � http://www.cityofdubuque.org 2007*2012•2013 Masterpiece on the Mississippi zai�*zoi9 ATTACHMENT C EXAMPLES OF ELIGIBLE AND INELGIBLE EXPENSES Federal regulations demand that this fundinq be used only for eliqible expenses. All expenses must be necessary, reasonable, and directly related to the activity. If you are unsure if an expense will be eligible for the Grant, you should first contact Economic Development Director, Jill Connors, for verification. You may email jilconno(c�citvofdubuque.orq or call 563-564-5686. Failure to confirm whether an expense is eligible may result in non-coverage of that expense by the Grant. The business owner is ultimately responsible for the cost of the expense. Proof of these expenses is required to be reimbursed by the grant, such as a paid invoice, bill, or receipt that clearly shows the item/service was purchased. SOME EXAMPLES ELIGIBLE NOT ELIGIBLE Rent/utilities of commercial space (home Laptop/technology/point of sale office not eligible) equipment Salaries for employees (not the owner) Furniture Permanent supplies (such as paper clips, "one time" supplies such as to-go boxes scissors, hangers, etc.) Permanent signage Temporary signs Permanent equipment Cell phone, phone plan, internet plan Marketing / ads Permit fees QuickBooks Inventory (the product you sell) Training/technical assistance Event space rental Website design 1 2