2018-00770 - Minneapolis 2040 Comprehensive Plan

2019-00899 - 2020 City Budget
2019-00838 - Update on the Strategic and Racial Equity Action Plan

Introduction
A staff team from the Department of Community Planning and Economic Development (CPED) comprised of people from the Business Development and Small Business teams reviewed CPED’s small business financing and technical assistance programs during the summer and fall of 2019.  This team engaged 36 individuals representing 22 program partners in the review of five small business financing programs, two components of the Great Streets program, and the Business Technical Assistance Program (B-TAP).  The review evaluated the impact and alignment of the programs with new City policies from the Minneapolis 2040 Comprehensive Plan and the Strategic & Racial Equity Action Plan (SREAP) to better understand how the City can continue to remove barriers to small-business development throughout Minneapolis. 

Overall, while not an explicit component of the most programs’ design, data show that the City’s small business lending and technical assistance programs serve a higher percentage of Black, Indigenous, and People of Color (BIPOC) clients than the proportion of BIPOC business owners in Minneapolis.  While the review found that the City’s investments do have impacts on targeted entrepreneurs, it also found a general lack of awareness of the programs and other areas to improve outcomes. 

Building on the success of the programs, there are opportunities to improve their impact and further align them to current City policy priorities, SPREAP metrics of urgency, and address SPREAP vital few project. The findings, proposed recommendations, and next steps summarized below describe the opportunities. 

Key Findings of the Review

• Existing programs all connect generally to one or more Minneapolis 2040 policies. 
• While the programs do not necessarily have explicit goals related to racial equity, in practice, our financial and technical assistance programs serve a higher percentage of BIPOC clients than the proportion of BIPOC business owners in Minneapolis.
• The Great Streets and B-TAP programs provide needed tools which support community-based organizations across the City.
• Our small business lending programs are weighted towards investment in buildings and equipment.  Over 70% of the City’s investment in small business support programs is tied to investments in physical capital.  These types of investment are a necessary component to small business support, and the City’s programs fill an important gap in the private market, but physical capital is only one component of what small businesses need to succeed.   
• The implementation of our programs is highly partner-dependent, which has benefits and risks.   
  • Key benefits include:
    • The City’s funds can go further by eliminating the need for direct administration and leveraging private and other philanthropic money raised by partners. 
    • Community level work can allow for more culturally responsive, geographically relevant services and outcomes.
  • The downsides of this model include:
    • Clients sometimes do not realize that the City sponsors the program since they primarily interact with partners and those partners hold the relationship with businesses in large part.
    • Organizational capacity is not consistent across organizations or geography.  A business’ experience may be different depending on where its located or which organization the business engaged, opening room for variation in service.  
• We don’t have complete data about the results of our programs and investments.  While we track certain outputs from our programs (e.g. numbers of loans made, entrepreneurs coached, etc.), there aren’t methodologies in place or available to track business outcomes or measure the impact of our investments (e.g. growth in sales, jobs, business ownership, etc.)
• Demographic data of participants, too, is incomplete. 

General Recommendations

Adoption of Minneapolis 2040 and the SREAP formalize the City’s focus on equitable economic development.  But making change is not without challenges.  Without added resources, any changes will necessarily involve tradeoffs within existing resources and programming.  The high-level priority recommendations are:

1. Establish consistent mechanisms for all small business programs to track demographics of participants, and meaningful outcomes for the businesses.
2. Encourage collaboration between our partners, both within and across programs, to connect clients to the services they need. 
3. Explore ways to increase businesses’ access to direct professional services (e.g. accounting, architects, design, legal).
4. Implement targeted, coordinated communication, marketing, and promotion of City programs with a specific focus on BIPOC entrepreneurs.
5. Continue to examine barriers to capital access, especially ways to address the working capital needs of emerging businesses and to support opportunities for established businesses to own their real estate. 

Staff will prepare a workplan to address these recommendations and the Action Steps listed in the next section of this report and return, when needed, to the City Council for additional approvals. These Action Steps include steps to operationalize elements in the 2020 City budget to support Cultural Districts. 

Action Steps

Small Business Financing Programs Reviewed

The program review examined the following City programs administered by CPED, often through community-based partner organizations:    

Great Streets Programs Reviewed

B-TAP Programs Reviewed

Acknowledgements

Thank you to the following external partners who took the time to speak with staff for this review 

• African Development Center - Nasibu Sareva, Hibo Abdi, Rich Thomasgard
• African Economic Development Solutions - Gene Gelgelu
• Bii Gii Wiin - Kit Fordham
• Downtown Council - Dan Collison
• Hennepin Theater Trust - Joan Vorderbruggen
• Hmong American Partnership - Kim Facile, Chong, Tee (Fouatee) Yang, Susan Pha
• Lake Street Council - Allison Sharkey, Theresa Swaney
• Latino Economic Development Center - Henry Jimenez
• Metropolitan Consortium of Community Developers - Lee Hall, Mara O’Neil, Greg Gramza
• Metropolitan Economic Development Association - Dan Holmquist, Uri Camarena, Verena Getahun
• Native American Community Development Institute - Robert Lilligren 
• Neighborhood Development Center - Shahir Ahmed 
• New American Development Center - Asad Aliwey
• Northeast Bank - Dusten Johnson
• Northeast Minneapolis Chamber - Christine Levens
• Northside Economic Opportunity Network - Warren McLean, Stephen Obayuwana, Ann Fix
• Powderhorn Park Neighborhood Association - Tabitha Montgomery
• Seward Redesign - Renee Spillum, Shaina Brassard
• Southwest Business Association - Roger Worm
• Sunrise Bank - David Scott
• West Bank Business Association - Jamie Schumacher
• West Broadway Business and Area Coalition - Devon Nolan, Felicia Perry

The core project team included the following CPED staff

• Becky Shaw, Sr. Economic Development Specialist
• Emily Peterson, Business Training Coordinator
• Erik Hansen, Director Economic Policy & Development
• Jim Terrell, Principal Project Coordinator
• Judy Moses, Sr. Economic Development Specialist
• Lisa Passus, Project Coordinator
• Miles Mercer, Manager Business Development
• Rebecca Parrell, Sr. Project Coordinator
• Zoe Thiel, Manager Small Business Team 

[1] http://www.minneapolismn.gov/cped/ba/cped_two_percent

[2] http://www.minneapolismn.gov/cped/ba/cped_alternative_financing

[3] http://www.minneapolismn.gov/sustainability/homegrown/WCMS1P-129854

[4] http://www.minneapolismn.gov/sustainability/homegrown/WCMS1P-129854

[5] While guarantees have been used at various points in time, there has not been a formal/defined program

[6] http://www.minneapolismn.gov/cped/ba/cped_great_streets_home

[7] http://www.minneapolismn.gov/cped/ba/cped_great_streets_home

[8] https://lims.minneapolismn.gov/Download/PriorFileDocument/-41263/WCMS1P-134674.PDF