Increasing Support for Programs that Provide Technical Assistance to Small Businesses

Francine Delgado, senior vice president for New York City programs, testified to the New York City Council Small Business Committee about increasing support for programs that provide technical assistance to small businesses, such as the Seedco-operated NYC Business Solutions centers in Upper and Lower Manhattan.

New York City Council Small Business Committee
Increasing Support for Programs that Provide Technical Assistance to Small Businesses

Testimony delivered by: Francine Delgado
Senior Vice President for New York City Programs, Seedco

Good morning and thank you Chairwoman Reyna for the opportunity to testify before the Committee today. My name is Francine Delgado. I am the Senior Vice President for New York City Programs with Seedco, a national nonprofit that works with local partners to create economic opportunities for disadvantaged workers, small businesses, and communities. Seedco operates three NYC Business Solutions Centers funded by the Department of Small Business Services. These are the Lower Manhattan center, the Upper Manhattan center, and the new satellite center in Washington Heights. Seedco also runs the Upper Manhattan Workforce1 Career Center under a contract with SBS. Seedco’s subsidiary Seedco Financial Services is a national community development financial institution that specializes in small business lending.

About the Business Solutions Centers

The BSCs provide a range of technical assistance services to help entrepreneurs launch and grow their businesses. The most common types of technical assistance services provided at Seedco’s BSCs are access to capital, business planning and operations, and employee recruitment and training. Over the past two years, the Seedco-operated BSCs have served over 2,500 established firms, fulfilling 6,000 service requests. Some recent trends in our technical assistance offerings since the onset of the recession include the following:

  •  In 2009 we helped fifteen times more businesses file applications for minority or women owned enterprise (MWBE) certification, compared to 2008.
  •  In 2009, we helped 190 small businesses access $9.4 million in loans at an average of about $50,000 per loan, compared to 2007 when we helped just 44 small businesses access $4.8 million in loans at an average of $108,000. This demonstrates that with the credit crisis more businesses are turning to us to help them meet their financing needs from a range of credit sources.

In the midst of the recession, services to small businesses are more important than ever. In many cases, businesses are trying to stay afloat or re-engineer their business models to adapt to a changing economy. There is no question that times are tough right now for small businesses, but the BSCs are playing a critical role in the city to help small businesses, especially immigrant-owned firms and MWBEs create jobs and support neighborhood economies. I thought it would be useful to provide some examples of businesses we have helped over the past year that has in turn had a direct impact on job retention and creation:

  • When an immigrant entrepreneur wanted to open a restaurant in Williamsburg in the midst of the credit-crunch, he found himself unable to secure financing. We helped him access financing through our community lending partner Flushing Savings Bank, enabling him to open his doors. Then, he attended our Restaurant Management Boot Camp at the Lower Manhattan BSC offered in Chinese. His business opened one year ago and has created 15 new jobs.
  • When a popular Harlem bakery’s owners needed a loan for leasehold improvements and to mitigate a drop in revenues due to the recession, they were denied bank loans despite a 10-year history and profit of $300,000 from the previous year. Seedco Financial made a $175,000 loan to the bakery for renovations and working capital, and the Upper Manhattan BSC helped fulfill their hiring needs. Together, these services will help the bakery create 10 jobs.
  • An entrepreneur approached us for help opening a franchise restaurant on 72nd Street because he lacked the necessary financing. We assisted him in packaging an SBA loan, and then we connected him with a credit union that approved the $340,000 loan. As our client undertakes extensive renovations, we are helping him understand and access incentives such as energy efficient equipment, as well as proper permits. When the restaurant opens, it will generate 10 new jobs.

Need for Increased Support for Technical Assistance

Based on what we have witnessed over the past two years in working with our small business clients, we have identified some specific areas for increasing technical assistance support that we believe would have a significant impact on small business success and job growth:

  •  Access to capital: in good economic times and bad, financing always tops the list of small business needs. The recession has magnified this need as credit is more difficult than ever to access. There is a great need to provide more dedicated and targeted assistance to help small businesses identify and package complete applications for American Recovery & Reinvestment Act (ARRA) subsidized SBA loans, the City’s Capital Access Program, and other alternative financing products.
  • Cost-cutting measures: As could be expected, we are finding many businesses in need of help with implementing cost-cutting measures. For example, more support could go into helping businesses cut back on real estate costs by moving to e-commerce or relocating to cheaper space.
  • Facilitated access to incentives: There are a growing number of incentives, tax credits or exemptions, and other resources that are being made available to small businesses through federal policies in ARRA, the pending jobs bill in Congress, and state and local programs. While these incentives and programs can help businesses save thousands of dollars a year, we are finding that in many cases small firms are not accessing them. It is a trend we have seen in the social services world with benefit programs like food stamps, where many eligible individuals do not access benefits they are eligible for because they are unaware they exist or they do not have time to complete often complex application forms and procedures. While much work has been done in the social services field to increase access to benefits through programs like Access NYC, New York State’s, and Seedco’s own EarnBenefits, there has not been a similar effort for the “benefits” available to small businesses. With increased support in technical assistance, Seedco would be interested in piloting a “benefits for business” model by programming the eligibility criteria and application forms for small business incentive programs into our EarnBenefits technology tool that we could then use to help small business owners seamlessly apply for the various incentives and programs.
  • Localizing service delivery: Our experience with the Washington Heights BSC satellite has demonstrated the value in making technical assistance services to small businesses as local as possible. The Washington Heights model has been very effective in helping us serve small businesses that would not otherwise come to our center in Harlem. This success is something that can be replicated across the city in other small business communities that are geographically isolated from the BSCs.

Thank you very much for your time and I would be happy to answer any questions from the Committee.