New federal program extends training and ‘a compass’ to small business owners

The Small Business Administration is investing in more support and training for minority entrepreneurs and businesses in underserved communities.

The last two years have been a gauntlet of challenges for República Empanada, a popular restaurant serving up empanadas and Latin American comfort food in the Southside Heights area of Mesa, Arizona.

COVID quarantines, supply chain disruptions, worker shortages—all of it has made this stretch the most difficult since the restaurant opened near a light rail line in 2013.

But República and many other businesses in the Mesa community have benefitted from something that many small businesses across the country lack: support services from a “community navigator.” Rail CDC, a public assistance organization, has helped businesses in Mesa apply for federal loans and has provided training and coaching as they figure out how to stay afloat.

“Rail CDC’s level of engagement with the community is unlike anything I have ever seen,” said Marco Meraz, República’s owner. “They reach out to see how you are doing, call you, visit you, and provide workshops to help you.”

Now, more businesses stand to get that kind of support as a new federal program helps community navigators expand their services.

The federal Community Navigator Pilot Program awarded $100 million in grants last fall to increase the reach of organizations assisting small businesses, with a focus on serving minority entrepreneurs or businesses that operate in underserved communities. The work got underway in December and will run for the next two years.

The big idea: Most of the 51 grantees are nonprofit public assistance organizations, like Rail CDC and its larger partner the Local Initiatives Support Corporation. But a number are arms of public and nonprofit colleges interested in doubling down on their community service mission.

Both types of navigators are increasing their focus on training and education for entrepreneurs, alongside technical assistance and other services. The new investment may for the first time test the full potential of the community navigator model by connecting and expanding it at a national level.

The kind of networking and collaboration the new program provides has been used successfully in healthcare—and could be equally transformational for small business development, said Misty Fox, director of the entrepreneurship and small business portfolio at Syracuse University’s Institute for Veterans and Military Families, one of the grantees.

“This has never been done on a national scale in the U.S. before,” she said.

Training and ‘a compass’ for entrepreneurs

Misty Fox (left), director of the entrepreneurship and small business portfolio at Syracuse University’s Institute for Veterans and Military Families, leads a training event for veteran entrepreneurs. (Courtesy of IVMF)

The institute at Syracuse is among several grantees, including ones in Arkansas and Minnesota, that are housed at universities.

The institute will use its grant to tap into an existing service network for veterans, America Serves, and tailor its offerings to the particular needs of small business owners. The focus will be in New York, Florida, Pennsylvania, Maryland, Texas, and the District of Columbia, which all have large veteran populations.

“It will be the first funding mechanism that drives toward connectivity for services for veterans—not toward building new services, but rather toward ensuring existing organizations servicing veteran business owners are working well together,” said Fox, who is overseeing the project.

The goal is to ensure “that there’s no wrong door for veterans to get these services.”

The institute already has extensive entrepreneurship and small business programming, including 11 national programs that work with veterans at various points along the path to starting and growing a business. They also run career prep and transition services, and work with more than 400 employer partners to provide jobs to veterans.

Many veterans are interested in building something of their own, Fox said. Research by the SBA has found that veterans are twice as likely as nonveterans to start businesses, and that they own more profitable businesses and pay their employees more than do their civilian counterparts, she said.

On the ground: Chris Dambach’s business is a prime example. Dambach was discharged from the Marines Corps after suffering traumatic brain injury while serving as an infantryman in Iraq. He joined the institute’s Entrepreneur Bootcamp for Veterans in 2013, and went on to build a landscaping and facility maintenance business, Industry Standard USA, which does more than $10 million in annual revenue.

Chris Dambach, owner of Industry Standard USA, speaks to fellow veterans at a training event run by the Institute for Veterans and Military Families at Syracuse. (Courtesy of IVMF)

Entrepreneurship comes naturally to many veterans, Dambach said. They’re accustomed to dealing with new and unfamiliar challenges, to performing well with only limited resources, operating under pressure, and directing others—skills that are all important for starting a small business.

The flipside, he said, can be overconfidence and stubbornness.

“I entered EBV in 2013 thinking there was nothing they could teach me—that was very ignorant,” Dambach said. “The bootcamp opened my eyes to things I didn’t know and essentially said ‘here’s a compass, here’s a map, and we’re here for support.’”

He’s stayed in regular touch in the years since, calling when he has hit roadblocks or not known where to start with everything from logo design to government law. The team has suggested experts who can help, and connected him with other entrepreneurs who faced similar challenges.

“I can’t tell you how helpful this has been to my business,” Dambach said. “Without it, you’re going into battle without any bullets in your gun. You have to have the education and support.” 

For disabled veterans, navigating injuries while running a business can be a formidable challenge, he said. “Imagine trying to operate with the most extreme hangover in your life every single day,” Dambach says of his injuries. “That’s what I could equate it to. I forget multiple things every day. But I mean, I have both my legs and both my arms and I’m not complaining.”

A third challenge for veterans is muscle memory from their service years that tells them that accessing resources is somehow inappropriate or may take away resources from brothers-in-arms.

“I had buddies who were in the Marines who would say, ‘Chris, you keep telling me about this EBV course and how amazing it is. But I don’t want to sign up. I don’t want to take the spot where another veteran could go in my place,’ and I tell them ‘that’s not the situation. These services are already paid for and there’s plenty of room. You’re not stealing anybody’s spot.’”

Focus on communities ‘left behind’ 

Building on experience: Many community navigator programs have operated for decades. Navigators played an important role during the Great Recession and supported the implementation of the Affordable Care Act in communities across the country, said Bill Taft, senior vice president for economic development at Local Initiatives Support Corporation, another community navigator program grantee that works closely with RAIL CDC.

But COVID has underscored the critical importance of such services to small, disadvantaged businesses, he said.

An irony of the pandemic is that despite a relatively large amount of federal, state, and local resources available to help small businesses compared to resources provided in previous crises, precious little has actually made its way to those businesses. Instead, much of that assistance has flowed to bigger companies well-served by banks, accountants, and lawyers. They also have tended to be companies with predominantly white leadership. 

A case in point was the first set of loans under the federal Paycheck Protection Program, a program run by the U.S. Small Business Administration that provided federally-backed loans to help businesses cover their labor costs during COVID disruptions.

The early success rate of white applicants for loans was 60 percent compared to a success rate of 29 percent for Black applicants, according to a Public Private Strategies Small Business Survey conducted in partnership with National ACE, U.S Black Chambers, and U.S. Hispanic Chamber of Commerce.

Reaching new communities: The problem for many busy small entrepreneurs is knowing what help is available and how to access it. “If you are a minority entrepreneur working around the clock on your business, it’s really hard to keep track of what’s available to you and who’s eligible for what,” says Taft. “It’s just a bewildering array of things that are out there.” 

In addition, minority-run businesses and those in rural or disadvantaged areas tend to be smaller and less wealthy and to have fewer employees, making it harder for owners to find the bandwidth to seek out loans and other small business assistance.

The SBA improved on delivery to non-white and disadvantaged businesses in a second round of loans by specifically targeting sole proprietors, said Gary Cunningham, CEO of national economic opportunity nonprofit Prosperity Now.

His group also has advocated for community navigators, and Cunningham was one of 11 co-authors of a policy roadmap, “Big Ideas for Small Business,” that supported the creation of the new federal program.

The SBA has acknowledged a previous gap between the services it offers and small, disadvantaged entrepreneurs’ ability to access them, and SBA Administrator Isabella Casillas Guzman touted the Community Navigator program, which it administers, as part of the solution when she first announced it.  

“It helps us to connect with small businesses that have historically been underserved or left behind,” she  said. “These businesses—predominantly the smallest of the small, in urban and rural America, and owned by women, people of color, or veterans—have suffered the greatest economic loss from this pandemic… We need to ensure that all entrepreneurs have the support they need to recover.”

A growing reach

More than 700 organizations applied for the navigator grants, with 51 receiving awards. The program is a large experiment in better delivering services to minority communities, and the SBA will be tracking outcomes. 

An important metric will be how well the program serves established businesses that seek further growth, like República Empanada, said Cunningham.

Currently, 97 percent of Black entrepreneurs have businesses that earn less than a million dollars a year in revenue, he said, and typically employ only a few people. While that’s sustainable, Cunningham said, it doesn’t have a big economic impact on communities of color.

Navigators can help those businesses go through a second or third stage of development, he said, and start to hire up. They also can help new entrepreneurs better target high-growth fields like healthcare, transportation, and IT.

“Then you can start to change the game for communities of color by creating a larger economic base, jobs and opportunities,” Cunningham said. “That’s what the potential here is.”

The River Market in Little Rock, Arkansas (Mick Haupt/Unsplash)

Expanding access: Growing a small business often depends on being able to access loans and other resources. In Arkansas, one of the poorest and most rural states per capita according to U.S. Census Bureau data, less than a quarter of small businesses were able to access PPP loans, said Michael Singleton, associate state director of the Arkansas Small Business and Technology Development Center.

The center, which is housed at the University of Arkansas at Little Rock, was granted $2.5 million under the federal Community Navigator program to expand its services in the state. 

The increased resources will allow the center to do a more thorough job of tracking, curating and sharing opportunities, and to work alongside more entrepreneurs to match them with information and services, Singleton said. 

“Almost every single day, I get a new piece of information from a group that’s undertaking a new effort or from a new fund that’s available to serve small businesspeople,” Singleton said.

In addition to providing technical assistance for business owners, the center runs a program, dubbed “Build Your Own Business,” for its students and others at a half dozen institutions across the state. At UA Little Rock, many students in the program never pursued higher education or left without completing and started gig work or other small businesses instead, Singleton says. They’re now looking to get a degree, while still doing that work.

“We have done a lot of educating to raise the profile of such activities,” Singleton said. “We want to make sure that students are aware that when they do something like DoorDash they’re pretty much acting as a small business. With the rise of the whole gig economy we have definitely seen an uptick in that and we are trying to respond to support them.”

The small business center also connects about 100 students a year to entrepreneurs through a work-based learning program, Real World Classroom. 

Under the program, the center works with faculty that teach specialized business courses, such as marketing research or crisis communications, and pairs them with small business clients that have a need in those areas. The businesses get much-needed help, and students get experience working on real projects, Singleton said. 

“For students, having a real live client is much more interesting than a simulation. It gives them confidence in their knowledge and their ability to apply that in a meaningful way,” Singleton said.  “The business owners love it because they get hands-on assistance to do the things that they need to do. And the faculty members like it because it offers real world kinds of experiences for their students.

“As in real life, everything’s not tied up neatly in a bow, which can help students develop personal communication skills, professionalism, and things like that.” 

A farm in Glyndon, Minnesota (William DeHoogh/Unsplash)

Another university grantee, the Strategic Partnerships Center at Minnesota State University, Mankato is using the new funding to increase outreach and education for underserved small businesses in the food and agriculture sector.

The grant also will allow the university center and its partners, for the first time, to serve entrepreneurs interested in becoming farmers or food-focused business owners, said Teri Wallace, interim associate vice president for research and dean of extended campus at MSU, Mankato.

One of the partners, the Minnesota State Southern Agricultural Center of Excellence at South Central College, for example, will use grant money to expand its farm business management program. 

“Farm business management education has been available for 60-plus years in Minnesota,” said Brad J. Schloesser, executive director of the center and Dean of Agriculture. “But every year, farmers start the program and say they’ve never heard of it before.”

Now, that might finally be changing.

David Tobenkin is a freelance journalist and an Institute for Citizens & Scholars Higher Education Media Fellow based in the greater Washington, D.C area.

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