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Majority of 1st-round ‘Back to Business’ grants went to minority-owned businesses, officials say as industry begs for more

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Tuesday, October 12, 2021  |  Article  |  Joel Ebert

Business (10)

A newly launched grant program aimed at helping small businesses recover from the COVID-19 pandemic has awarded 784 companies a total of $36 million as of last week with a majority of funding going to minority-owned businesses, a state official told a panel of lawmakers on Thursday. 

 

The Back to Business grant program, which Gov. JB Pritzker announced in August, is funded by the American Rescue Plan Act with a focus on communities and industries that were among the hardest hit by the pandemic. 

 

Related: Pritzker announces new $250 million Back to Business grant program 

 

Appearing before the House Small Business, Tech and Innovation Committee, Department of Commerce and Economic Opportunity, acting director Sylvia Garcia touted the success of the new grant program, which will provide a total of $250 million to Illinois businesses. 

 

The state began accepting applications for the grant funds on Aug. 18, with the first round of awards being issued late last month. 

 

As of Thursday, grants had been distributed to businesses in 183 Illinois municipalities. Recipients include 292 restaurants, 74 hotels and 69 arts-related businesses or organizations. 

 

When lawmakers approved the annual state budget earlier this year, they called for the program to set aside $25 million for hotels, $25 million for restaurants and $30 million for arts organizations. 

 

Among the program’s “priority” industries, awards have been given to 41 barbershops or salons, 20 clothing or electronic retail stores, 16 event providers and 15 dry cleaners. 

 

The average year-over-year revenue decline for businesses that received the grants was 41 percent, Garcia said.

 

“We really are seeing a lot of folks that had big losses in 2020 and being able to help them,” she said.

 

Nearly 87 percent of recipients of the Back to Business grants had applied for but did not receive the state’s Business Interruption Grants, which the state issued last year thanks to funding from the federal Coronavirus Aid, Relief, and Economic Security Act. Additionally, 565, or 72 percent, of the Back to Business grants went to companies located in “disproportionately impacted areas,” Garcia said.  

 

More than half of grants awarded so far have gone to entrepreneurs of color. The program was in part designed to prioritize minority-owned businesses.

 

Asian-owned businesses have received 22 percent of the total awards. Black-owned businesses have accounted for 16 percent, while Latino-owned companies have received 12 percent of the awards, officials said. Thirty-five percent of the awards went to white-owned businesses. 

 

“We know there’s always more work to do in this realm, but I think that’s really important and front and center for us,” said Garcia. 

 

With a similar focus on helping small businesses, Garcia said 55 percent of the grants awarded so far have gone to companies that earned less than $500,000 in revenue in 2019. 

 

To receive funding, businesses had to demonstrate that they had experienced a loss in revenue in 2020 because of the COVID-19 pandemic. Grants range from $5,000 to $150,000 based on each firm’s revenue losses in 2020. Additionally, recipients were limited to receiving no more than $20 million in annual revenue, with the exception of hotels. 

 

In August, representatives of the state’s hotel industry urged a panel of lawmakers to use more of the American Rescue Plan funds to help the hospitality industry. 

 

Former Sen. Matt Murphy, a representative of the Illinois Hotel and Lodging Association, said he hoped lawmakers would appropriate more money to the industry during the October veto session, “if not sooner.”

 

Garcia said after the General Assembly acknowledged there wasn’t “a specific program” for hotels, her agency worked with the Illinois Hotel and Lodging Association in recent weeks

to ultimately increase thresholds for eligibility. As a result of those discussions, hotels faced a $35 million revenue cap and could receive up to $250,000 in Back to Business grants. 

 

With applications for the grants still coming, Garcia said businesses that apply can be prioritized if they meet certain criteria, including if they take in less than $5 million in annual revenue, applied for the Businesses Interruption Grant but did not receive it, failed to receive other emergency relief funding or are located in disproportionately impacted areas or a hard-hit industry. 

 

“The more of these boxes that an applicant checks, the higher up in the priority list they go for review,” she said. 

 

Facing questions from committee members, Garcia noted one of the top issues her agency is facing with the program is businesses that had not filed their federal income tax returns in 2019 and 2020. She also said another difficulty facing her agency is lack of knowledge about the program. 

 

To help inform the public, the department and “community navigators” have held more than 500 in-person events and 245 webinars that have reached more than 130,000 businesses throughout the state, she said. 

 

After Garcia concluded her overview of the program, Elliot Richardson, president of the Small Business Advocacy Council, challenged lawmakers to consider whether spending $250 million out of the state’s more than $8 billion in American Rescue Plan money was enough.

 

“We hope it is, but we don’t believe so,” he said. Richardson made an appeal to the committee to “act quickly” and “replenish” the Back to Business grant funds. 

 

Garcia said although her agency is still going through applications for the Back to Business grants, she thought the “demand for the program will exceed the dollars that are there.” 

 

“We do think we’ll exhaust all of the funds that we’ll have,” she said. 

 

The application period for the Back to Business grants closes on Oct. 13.