Local initiatives like the San Francisco Revolving Loan provide entrepreneurs with access to small, low interest loans, and have proven to be incredibly successful for the startups that use them. These microloans are a great resource for local entrepreneurs and can be used by any qualifying startup, be it food truck or mobile app.
For startups, the first big challenge they most often face after creating their product is getting funded. There are a host of federal legislative measures currently being discussed that are aimed at easing the way for entrepreneurs to access capital, like the JOBS Act, which legalizes crowdfunding -- smaller, crowdsourced investments for equity in companies. But there are also plenty of local initiatives to spur the growth of startups.
Jason Elliott, the Director of Legislative and Government Affairs at Mayor Ed Lee’s office, spoke to Engine about the San Francisco Revolving Loan Fund. The fund was started by former Mayor Gavin Newsom and has proved very successful -- it provides “microloans” for small businesses to be used for any purpose in the business aside from hiring, which are recycled back into the program once they have been paid back. Mayor Lee’s desire to continue to foster the initiative as part of his agenda to create jobs means that 1.5 million dollars will be added to the fund this year with supplemental appropriation from the city’s general fund, which was extra robust this year.
“The need is astronomical. We have had hundreds and hundreds of businesses contact us, in the 300-400 business range, saying ‘I want to access this program’”, Elliott said.
The businesses that have used the program -- 28 of them so far -- have created or retained 74 jobs, and are largely founded by non-traditional entrepreneurs: 56% of the founders are women, 37% are minorities, and 67% come from economically disadvantaged backgrounds.
Urban Bazaar is one such business -- founders Briana Bers and Brandi Chalker, who spoke to Engine, are low-income women, without access to bank loans or other traditional sources of capital. They accessed the loan through TMC Working Solutions. “We were able to open our business because of the SF Revolving Loan Fund, which was our only outside source of startup capital”, Brandi said. Urban Bazaar, like its founders, is focussed on nurturing a community, and sources its products from a network of Fair Trade groups, small artisan cooperatives, and independent U.S. artists and craftspeople. Along with sourcing from local artists, Brandi and Briana involve the local community by hosting events and offering various workshops -- from craft and terrarium building to as marketing and business building workshops for local independent artists that are aimed at inspiring and educating others to do what they’ve done.
“I love small businesses and the small business culture in San Francisco especially. I believe that more investment in startup businesses is a surefire way to help our economy recover and inevitably see more sustainable growth. It's unfortunately too difficult to find the funds to start a business for many people who have great ideas and the skills to make their ideas into a reality, which is why programs like the Revolving Loan Fund are so important,” Brandi said.
Programs like the Revolving Loan Fund can breathe life back into local economies nationwide. “Any city that can make the commitment to support small business will reap the rewards of expanded economic development and economic activity,” Elliott said.
San Francisco isn’t the only city with programs that promote local entrepreneurship. Here are a couple of other government initiatives for startups:
- The federal program for Small Business Innovation Research, or SBIR
- Seattle’s CDBG Small Business Loan Fund
- Ohio’s Third Frontier program
- Michigan’s SPARK business accelerator
- And all of the cities on this list:
Know of any others? Let us know about what your city is doing.
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