NEWARK — Newark will use $1.5 million of federal relief funds to award grants to small businesses that are “exceptionally disadvantaged by the pandemic,” in an attempt to head off more closures in the small East Bay city.
The grants will be up to $20,000 per business, and can be used to pay for a variety of things, including employee wages, current or back-due rent or mortgage payments, utilities or other expenses such as advertising or supplies.
The program, called the Exceptional COVID Grant Program, will be aimed at small personal services businesses, like hair and nail salons, barbers, cosmetologists, personal trainers, in-home care providers and small day care or education centers.
While previous local and federal grants helped support businesses that took a financial hit because of the pandemic, city officials say those programs have been insufficient, especially for personal services businesses, which were hit hard because of extended forced closures.
“Public health mandates closed most personal services providers for at least six months during the course of the pandemic,” said Anne Stedler, Newark’s economic development director, during a Nov. 18 City Council meeting where the grant program was approved.
While much of the business world was hurt by the pandemic, city staff reports noted that public health protocols didn’t affect all evenly.
For example, while restaurants were prevented from serving customers indoors, take-out sales were permitted most months of the pandemic, “which reduced operating costs and provided income and customer retention,” city staff reports said. But personal service businesses had no money coming in during the closures.
“Their survival is in jeopardy,” Stedler said of small personal service businesses. She said prior grant programs like Economic Injury Disaster Loans, Paycheck Protection Plans, California Relief Funds, and the Newark CARES grants did not fully make up for losses suffered by some businesses forced to close for months at a time during the pandemic.
“Furthermore, most of the COVID grant programs were not sufficiently targeted to these tiny micro businesses where the need was greatest,” Stedler said.
According to a city consultant who held sessions with more than 80 small business owners, personal services businesses are often owned and operated by people belonging to “traditionally disadvantaged” groups.
About 68% of those businesses are owned by women, about 59% of them are owned by people of Asian descent and about 12% are owned by people of Hispanic descent, city reports said. On average, they have been open for a decade or more, and employ about seven people each.
“That’s an incredible amount of economic generation at the small business end of the spectrum,” Stedler said.
The grant program is being funded with $1.5 million of the city’s $11.8 million share of federal funds through the American Rescue Plan Act. The city will spend $30,000 of the $1.5 million to hire Michael Cohen of Spectrum Small Business Services to administer the grants, who will ensure that businesses properly fill out applications, and make recommendations for awards based on a scoring system.
Cohen said during the Nov. 18 meeting that there are three tiers of eligibility for businesses to qualify, to help determine who gets the grants and who doesn’t. The first tier includes businesses that were ordered completely closed for at least six months during the pandemic.
Businesses that were not forced to close but suffered revenue losses of greater than 50% in 2020 compared with 2019” qualify under the second tier, city reports said, and the third tier is businesses that spent at least 10% of their annual revenue on pandemic-related safety measures.
While the grants can be up to $20,000 each, they will not exceed 50% of a business’ 2019 annual revenue.
The grants are limited to businesses with 15 or fewer employees that have annual revenue of $500,000 or less. They must intend to stay in business for at least six more months.
“Every day as a small business owner, finances is your blood source,” Councilmember Michael Hannon said at the council meeting. “Time is of the essence. The sooner we get the money out to small businesses, the more likely they are going to survive.”
All business owners who are awarded grants will also be required to take a four-hour financial resiliency workshop, provided for free by Newark.
“I love that,” Vice Mayor Mike Bucci said of the workshop during the meeting.
“It’s so much more than just giving a grant and helping people kind of get over the hurdle. It’s hopefully educating them on some stuff they didn’t know that will help them get down the road,” he said.
“It is small business that makes the economic engine run,” Mayor Al Nagy said at the meeting. “And I think it’s important that in this time of need, where small businesses have supported our community for so many years, that we’re now giving back.”
There are interpreters available from the city to help people who do not speak English as a first language apply.
The deadline to apply is noon Dec. 6. A link to an information page about the program can be found here, and the application can be found here. Business owners who have questions or need translation help can email Michael Cohen at ssbsmichael@gmail.com.