Beyond Newsom’s Rebuilding Fund, additional action is necessary to preserve small businesses
With the launch of the Rebuilding Fund, California has laid a foundation for small business recovery, but much more needs to be done
This article, co-authored with Pedro Nava and Sean Varner, fellow Little Hoover Commissioners, was first published by Cal Matters on December 8.
On Nov. 20, Gov. Gavin Newsom announced the launch of a key program to support small businesses devastated by the COVID-19 pandemic — the California Rebuilding Fund. While we commend this strong start, the state must marshal more resources to address the pandemic’s impact on our small business communities.
The Rebuilding Fund is a partnership between state and local governments and private organizations — some for-profit, some nonprofit — that will provide financial support to small businesses in underserved communities. The governor and Legislature provided a $25 million anchor commitment in this year’s budget, state money that the Rebuilding Fund will combine with private capital to provide low-interest loans to small businesses.
“This public-private partnership,” Newsom explained, “will give underserved communities across California access to capital, making for a more inclusive economy.” On Nov. 30, Newsom further announced an additional $12.5 million state contribution to the Rebuilding Fund, bringing the state’s investment to $37.5 million.
As members of the Little Hoover Commission, California’s independent government watchdog, we congratulate the governor on these critical first steps. Yet with small enterprises on the edge of extinction, we highly recommend additional action to preserve and enhance the viability of small business, the backbone of our economy.
To rebuild California’s economy, state government must work boldly to support small businesses. These enterprises employ nearly half of California’s private sector workforce and are the lifeblood of vibrant communities. They are fighting for survival. More than 30% of California’s small businesses remain closed as a result of the pandemic. The impact has fallen most heavily on minority- and women-owned businesses, which were also underserved by federal relief programs.