Across the country, local governments are sending out small grants to their small businesses even though their budgets are already devastated, with some cities expecting revenue shortfalls of 20 percent. But city councils, mayors and governors see this help as a matter of survival.
“They realize that it’s much easier to retain businesses and jobs than to let them fail and presume the economy will stitch itself back together,” said Joseph Parilla, a fellow with the Brookings Institution’s Metropolitan Policy Program. “What we learned from the great recession is that it is not easy for the economy to heal itself.”
So far, they have given out at least $5 billion in aid. They are squeezing the money out of their own limited budgets along with donations from corporate benefactors and philanthropic organizations. But the biggest source was the first stimulus package, the CARES Act. As part of that, Congress allocated $150 billion to states — and cities with more than a half-million people — to cover costs related to Covid-19.
Most places are using a portion of the stimulus funds to offer loans and grants, but others are more innovative.
In Detroit, the New Economy Initiative, an organization founded by 10 philanthropic groups at the start of the last recession, began coordinating with local leaders right away when the pandemic hit. The organization put $5 million in the response pot — including $2.6 million raised in just two weeks. The initiative’s director and local leaders used that money and additional federal relief to flood the economy with grants, loans and rent support.
The city and its partners raised $400,000 for its Feed the Frontlines program, which paid restaurants to make thousands of meals for essential workers. And they created the Digital Detroit course to teach businesses how to build websites so they could shift to e-commerce; more than 200 people signed up for the first cohort. The mayor ensured that all business owners and their employees could get free rapid Covid-19 testing.
In all, Detroit said, the group has invested nearly $33 million — much of it donated or from federal funds — to support more than 2,000 local businesses.