History of Economic Development's Small Business Assistance Program Copyrighted
October 2, 2023
City of Dubuque Consent Items # 010.
City Council Meeting
ITEM TITLE: Historyof Economic Development's Small BusinessAssistance
P rog ram
SUM MARY: City Manager advised that the 2023 Small Business Grant Program nine
new participants are beginning in this year's grant and support program.
SUGGESTED Suggested Disposition: Receive and File
DISPOSITION:
ATTACHMENTS:
Description Type
MVM Memo City Manager Memo
Staff Memo Staff Memo
Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: History of Economic Development's Small Business Assistance Program
DATE: September 28, 2023
Economic Development Director Jill Connors advised that the 2023 Small Business
Grant Program nine new participants are beginning in this year's grant and support
program.
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Mic ael C. Van Milligen
MCVM:sv
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Jill Connors, Economic Development Director
Dubuque Economic Development
Department
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TO: Michael C. Van Milligen, City Manager
FROM: Jill M. Connors, Economic Development Director
SUBJECT: History of Economic Development's Small Business Assistance Programs
DATE: September 28, 2023
INTRODUCTION
The purpose of this memorandum is to provide complete historical information and
progress of our department's small business assistance programs.
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. Due to a low
success rate of advancing the businesses of recipients (only one is still in business), staff
reviewed the program and proposed changes to the approach that would reduce the
amount of funding provided (as a grant, not a loan) and include technical assistance to
participants.
The grant serves two purposes: 1) short term financial assistance to stabilize the
business, and 2) position the business owner to improve their business over the long term
through 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 inentoring report higher revenues and increased growth.)
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 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.
Two individuals took advantage of the program in 2019 and none in 2020 due to the
COVID-19 pandemic causing 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.
Simultaneously, beginning FY2021, Economic Development submitted a budget request
for funding to provide loan guarantees for small businesses taking advantage of the lowa
Microloan program. Having this stop loss fund allows the lowa Microloan program the
latitude to lend to borrowers that might otherwise be denied a business loan based on
regular underwriting parameters. Unfortunately, no one took advantage of the program
so this strategy was eliminated from our programming.
DISCUSSION
Over time, both City and Fountain of Youth staff have continued to evaluate and improve
the grant 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.
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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.
Another modification we have made is to increase the grant amount to $5,000 instead of
the prior $3,000. We have remaining funds from this past 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 have gathered demographic information to help us understand who is benefiting from
this program. To date, we have served 16 women, 9 men, 14 African Americans, 1 Pacific
Islander, and 1 Asian American.
A recap of grant program participation:
• 2019 = 2 participants (1 woman, 1 man, 1 African American, 1 Pacific Islander)
• 2020 = 0 participants
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• 2021 = 9 participants (7 women, 2 men, 7 African Americans, 1 Asian American)
• 2022 = 5 participants (3 women, 2 men, 3 African Americans)
• 2023 = 9 participants (5 women, 4 men, 3 African Americans)
We are updating our data gathering before, during, and after the program to measure the
impact of the program.
RECOMMENDATION/ ACTION STEP
This memo is for informational purposes.
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