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Baltimore officials seek to use pandemic as opportunity to strengthen city’s small-business economy

Kelly Simmons had been perfecting her butter crunch cookie recipe for about two decades when she decided to turn her hobby into a business. She opened Aunt Kelly’s Cookies in Baltimore’s Mount Vernon in 2018, not far from her native East Baltimore.

Despite some of the challenges inherent in running a business in the city, Simmons wanted to base her bakery in her hometown, where she knew a void existed in the butter crunch cookie market. But it hasn’t been easy, she said, especially having to navigate the permit procedures as she got off the ground and then deal with the challenges of running a shop during the coronavirus pandemic.

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“I was helped with the Paycheck Protection [Program] during COVID, but that is about it as far as government help,” said Simmons, who harbors dreams of developing a national franchise operation. “I went around the traditional, getting-a-loan type thing. I had help from a friend and a short-term investor.”

Acknowledging that difficulty, the Baltimore Development Corp., the city’s quasi-governmental economic development arm, plans to overhaul the way small businesses are launched, cultivated and sustained in the city. The pandemic underscored just how vulnerable the small-business community is to devastation, said Colin Tarbert, the BDC’s president and CEO, but the problems have festered for years.

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While small businesses generally drive the nation’s job growth, in Baltimore, they account for a relatively small share of the city’s overall workforce expansion compared with larger entities.

“A startling fact is that for the period 2010-2017, virtually all new job growth in Baltimore occurred in businesses and institutions with 500 or more employees,” the BDC’s newly published five-year planning report reads. “It’s clear that Baltimore’s small business development systems need improved coordination, increased accountability and a more thoughtful allocation of resources.”

The BDC report lays bare the challenges specific to the city’s small-business community, as well as outlining ideas for strengthening neighborhoods, increasing population density and promoting arts, artists and tourism.

The BDC, along with the Mayor’s Office of Minority and Women-Owned Business, already formed a partnership last year with the Baltimore Small Business Support Fund and several city foundations to provide technical assistance and capital to small-business owners, with a particular focus on those owned by people of color and anchored in predominantly Black communities.

Some 2,000 businesses have been served by this public-private partnership, perhaps helping avert catastrophe after stay-at-home orders and social distancing recommendations changed how people spent money.

“Sometimes, businesses go to multiple resource providers,” Tarbert said. “So instead of that, we want to triage the data at the entry level to figure out where the best place for them to go is, and, depending on what it needs, the right partner.”

The Small Business Support Fund coalition has helped businesses access some $27 million in funds, Tarbert said. And many of the businesses that struggled during the pandemic not only needed more money but also sought help navigating the bureaucratic network of forms, paperwork and steps necessary to access loans.

The BDC’s planning report also cites persistent racial and ethnic barriers as blocking the city’s proprietors from reaching their full potential.

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“The majority of Black-owned businesses have to use our own money. We get financing less and it costs us more,” said Debra Keller-Greene, chair of the Greater Baltimore Black Chamber of Commerce. “Certainly, using our own money, we can’t grow to the level we need to.”

Keller-Greene, also a management consultant at her own small business, Keller Professional Services, said she and her colleagues have been meeting with banks to ensure they meet their commitments to put money into the communities from which they draw deposits. Too often, they don’t, she said.

Small businesses employ as much as 64% of the nation’s workforce, according to the U.S. Small Business Administration. Those owned by people of color are more likely to hire other employees of color and give back to their communities. And they help cities grow and remain sustainable by creating jobs.

Matt Williams, a founding partner of Mount Royal Soaps, sees his mission as a small-business owner in Baltimore as inextricably tied to bolstering entrepreneurship and jobs in the city. He wants his soap-making company — which pivoted during the pandemic to also producing personal protective equipment — to rival Purell.

The pandemic helped, rather than hurt, Williams’ business, with soap shortages extending the company’s reach and helping it enter into new contracts with large institutions, including local hospitals, universities and city government.

Mount Royal Soaps opened its first 10,000-square-foot factory last year, tripled its workforce and has plans to open another brick-and-mortar store to complement its existing space in Remington. But it needs buy-in from the city, state and other Maryland businesses and institutions to keep growing, Williams said.

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“When Mount Royal Soaps says ‘buy local,’ we mean buy local in our retail store, but also procurement,” Williams said. “Buy local, buy our products, and buy our products meant for institutions as a way to promote job growth and equity in the city.”

State and city government also can provide needed relief for small businesses by working with property owners to make rents affordable, said Andy Cook, executive director of Made in Baltimore, a nonprofit run by BDC that promotes small, local makers. Rent is considered the largest expense of any business, he said, and often hinders businesses from meeting their potential.

“There’s a belief that manufacturing is dead, and that has translated to a lot of land-use policy that has reduced space for manufacturing in the city,” Cook said. “We need to be making sure we’re protecting affordable space for the city, for small-scale manufacturers.

“We’re not going to have Bethlehem Steel again, but there’s space for the two-, three- four-person shop: the chocolatier, the furniture maker, who would otherwise move to the county for space they can afford.”

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At the city level, City Council members introduced a bill in April that aims to boost minority- and women-owned businesses. The Transparency in Procurement ordinance would seek to reduce the number of city contracts, particularly those awarded via emergency procurement, that go to companies that aren’t minority- or women-owned.

The bill also should reduce the amount of “sole-source” contracting, said Democratic City Councilman Kristerfer Burnett, who co-sponsored it.

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“By studying what companies are available to compete for city projects, our agencies will be able to spot gaps in the market and help us identify places we can use legislation to build capacity among our local businesses,” he said in April, after the legislation was introduced.

More institutional support for small business is welcome, but success will stem from a cultural and societal shift to awarding more loans to people who may not qualify by traditional standards, said Bonnie Crockett, director of small-business lending at Baltimore Community Lending, a community development financial institution. It began lending to small businesses about three years ago.

Crockett said the barriers to capital are steep enough that even successful companies cannot pivot and grow quickly enough to accept large, game-changing contracts. They may not qualify for loans, she said, due to low credit scores or because they don’t have collateral to put up if there are problems paying it off.

Baltimore Community Lending seeks to disrupt this cycle by eliminating credit score cutoffs and not requiring collateral as a condition for loans, Crockett said. Out of more than 40 small-business clients who have received about $2.6 million combined loans from the community lender, none have defaulted, she added, and about half have been set up since the pandemic.

“Believing they are high risk is believing in something not supported by the facts,” Crockett said. “But it’s going to take more than one [community development financial institution].”


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