Boston faces pressure to make grants to struggling small businesses

Other cities, including Worcester and Cambridge, have already launched grant programs

Low-interest loans are nice, but many small businesses need grants to survive this pandemic.

That’s the urgent plea that advocates for inner-city businesses in Boston, led by CommonWealth Kitchen executive director Jen Faigel, made to the Walsh administration and members of the City Council on Monday.

The federal stimulus bill passed by Congress last week contains hundreds of billions for small businesses. But Faigel said the timing of when the money will be available is unclear. Most of that small-business assistance is in the forms of loans, not grants — and those loans come with strings attached or credit and collateral requirements that might exclude many entrepreneurs who badly need the money.

That’s where the city should step in, Faigel said. Her group’s modest proposal: Boston should provide grants of up to $25,000, for small businesses with up to $2 million in annual revenue. The group suggested the money could potentially come from the city’s allotment of Community Development Block Grant funds, a longstanding federal program that will be fortified by the new stimulus bill, like what some other cities are doing.

Many of Boston’s small businesses need help immediately and can’t wait several weeks for the stimulus money, if they’re going to make it out of this crisis intact.

Faigel has a front-row view of the economic carnage. Her nonprofit runs a shared industrial kitchen and commissary in Dorchester that doubles as a business incubator of sorts for roughly 50 food businesses at a time — or at least that’s what it did before she closed the kitchen due to the COVID-19 onslaught.

Those member businesses supported some 150 workers — that’s 150 lives, nearly all put on hold right now. Everyone from corporate caterers to sauciers to food trucks suddenly hit a standstill this month, amid the various shutdowns. Faigel closed the kitchen last week, but agreed to keep her 28-person payroll going until April 17, at least. She hopes she can reopen soon and redeploy her staff while the kitchen rental business is on hold. Her goal: making meals that can be delivered to needy families and seniors in their homes across the city. But how that will work remains to be seen.

The need for aid is pressing. Many of the CommonWealth Kitchen businesses haven’t had a dime of revenue for the past two weeks, and some owners went into debt just to pay employees. Most are unable to take on the additional burden of new loans, on top of their existing bills, Faigel said. Some are struggling, she said, just to pay for groceries.

In City Hall, they’re giving the proposal a close look, but aren’t quite ready to commit. John Barros, Mayor Martin J. Walsh’s economic chief, understands the stresses and strains that the city’s small businesses face. He said he’s reviewing the proposal from Faigel’s group, and hopes to bolster the city’s small-business assistance in short order. The city of Boston gets about $17 million annually in CDBG money from the federal government, although it’s unclear how much remains in this fiscal year. That money goes to a variety of purposes — small-business loans and some grants, as well as housing and job-training programs — and federal rules can make it tough to move funds from one program to another.

Joe Kriesberg, president of the Massachusetts Association of Community Development Corporations, noted that other cities such as Worcester, Fitchburg, and Cambridge have deployed CDBG money for small-business grants during the pandemic. It’s a good source of funds, but not the only one. He said many small-business owners don’t have a safety net, such as friends and family with the wherewithal to help, and need relief now, or at least until the federal stimulus money can flow here.

That was part of the thinking in Worcester. There, city officials set up a small-business resiliency fund, offering grants of up to $10,000, with CDBG money. The original plan was to divvy up $500,000 among about 50 small businesses. Peter Dunn, the city’s assistant chief development officer, said city officials began accepting applications last week. More than 250 businesses applied, he said, with roughly 150 meeting all the city’s initial eligibility criteria. One by one, they all lined up: restaurants, hair salons, framing shops, bookstores, boxing gyms.

City officials were surprised by the volume, and quickly decided to get more aggressive: They would dole out between $1 million and $1.5 million instead, to reach as many applicants as possible — and that’s just the first round. Dunn hopes to help more entrepreneurs, once additional federal stimulus money arrives. The problem for small businesses is already so profound that it won’t be solved by any one program, or anytime soon.