Ask any Rhode Island small-business owner if they could use more help – loans, grants, coaching, training programs – and it’s safe to assume they would all say “yes.”
While additional incentives will always be at the top of the wish list of small businesses, the array of programs available has expanded dramatically in recent years.
The revamp of R.I. Commerce Corp. under former Gov. Gina M. Raimondo was intended to lure major companies to the state. But it also brought a host of new funding options and other programs that benefited much smaller employers, too. In 2016, for example, the state launched a Small Business Assistance Program, offering microloans to the smallest of businesses. Over the last five years, the program has doled out $4 million to businesses that might otherwise struggle to secure lending from traditional financing institutions.
The so-called “small-business friendliness omnibus” included in the governor’s fiscal 2019 budget sought to further ease the bureaucratic burden by eliminating several fees and registration and license renewal requirements.
Meanwhile, some private and nonprofit groups have emerged on the scene with everything from startup support to expert coaching and, of course, money.
In 2016, Goldman Sachs debuted a state chapter of its national 10,000 Small Businesses program. As of May 2021, more than 350 small-business officials have graduated from the training program aimed at helping existing entrepreneurs expand.
Also in 2016, the Rhode Island Hispanic Chamber of Commerce opened its doors, and, thanks to its services during the COVID-19 pandemic, has increased membership from 70 before the pandemic to 700 as of July, according to Executive Director Oscar Mejias.
Still, problems persist. Minority businesses continue to face obstacles to funding, both through traditional lenders and state government, an inequity that attracted new attention amid the racial reckoning prompted by the killing of George Floyd by a police officer in Minnesota in 2020.
How to address racial disparities in the business community is also a source of debate; an economist who authored a 2020 report on Rhode Island’s economic growth suggested a minority business accelerator program as a solution.
But others say the problem is not about lack of programs but about connecting business owners to what’s out there already.
“Our early experience shows there are a lot of business owners and entrepreneurs who are just not connected to all the support that exists,” Kelly Ramirez, CEO of Social Enterprise Greenhouse, told PBN in 2020.
Those same concerns were part of the reason for revamping the R.I. Commerce department in 2016 – to improve outreach and communication with the business community as a whole. But the outlets through which those efforts have been channeled may not be the right ones to reach minority business owners.
“If SEG or Commerce R.I. have a new program, they go to [TV news] or The Providence Journal, and Latinos don’t read The Providence Journal,” Mejias said.
Also lacking, according to some, are the investors to support a burgeoning startup community. The state’s vibrant university scene and a growing number of incubator programs offer a launching pad for entrepreneurs to get their innovations off the ground. But when it comes to equity or venture capital to turn ideas into bona fide businesses – and keep them in-state – options remain scarce.
A few firms are making waves: Slater Technology Fund, for instance, has invested more than $37.5 million in technology-focused startups since 2005, PBN reported in 2019.
But businesses continue to bemoan a lack of investors, particularly in industries outside of technology. The General Assembly in 2019 sought to fill the gap by offering investment companies tax credits in return for pumping money into local businesses. The controversial legislation, which the Raimondo administration warned was overly risky, has not seen the kind of uptake proponents hoped, in part because of additional limitations R.I. Commerce tacked on once the bill passed.
Only a single investment company, Enhanced Capital, has been approved to accept applications for potential businesses, according to Commerce spokesman Brian Hodge. Two other investment firms were turned down under the initial regulations, and no new companies have since sought to join the program, Hodge said.
How the state spent its federal stimulus money during the pandemic also remains a sore spot among small-business owners, even after the virus began to weaken its grip on the economy. Commerce Secretary Stefan Pryor said the $125 million from the Coronavirus Aid, Relief and Economic Security Act that the state spent specifically on small businesses – equal to 10% of the state’s total funding – was much higher than what neighboring Massachusetts or Connecticut doled out to their business communities.
But whether that was enough to stave off the storm of health and economic consequences was unclear. Numerous restaurants, retail shops and other small businesses have already shuttered – though there’s no comprehensive data source to track how many – and some believe the fallout isn’t over.
“We expect to see another round of closures happening after the summer season,” said Sarah Bratko, lobbyist for the Rhode Island Hospitality Association. “They scraped it together but they’re operating on a shoestring. It can’t last.”