Since the coronavirus took hold in the United States in the spring, small businesses have been bearing the brunt of the country’s economic woes.
A July study by LendingTree estimated that as many as 40% of small businesses in the nation’s largest cities were in danger of shutting down permanently without a return to normalcy soon. And according to the U.S. Chamber of Commerce, companies led by women and minorities have been disproportionately affected by the downturn.
Which is why actress Sofia Vergara and the microfinancing nonprofit Kiva are raising funds for those particular groups of business owners.
Four months ago, Vergara teamed up with Kiva to launch the COVID-19 Response fund with the goal to raise $50 million for minority- and female-led SMBs worldwide. As of today, the fund has garnered $60 million through crowdsourcing, which has already been disbursed to more than 70,000 marginalized businesses in the U.S. and abroad. Roughly 84% of the loans have gone to women-owned companies. And 70% of the U.S. recipients were run by Black, Indigenous or people of color.
“When COVID-19 hit, I immediately knew that I wanted to do something to help those who were most affected in a big way,” Vergara said in a statement. “I have long supported microfinance efforts and have seen the impact that providing small business loans can have on marginalized communities, and especially woman owned businesses.”
In total, more than 250,000 individuals invested the COVID-19 Response fund. But some major corporations also took part, including DoorDash, PayPal and eBay. And most recently, retail giant Walmart joined the effort by donating proceeds from face mask sales.
“We launched the fund to accelerate necessary loans required to support entrepreneurs and small business owners affected by the coronavirus pandemic, who traditionally struggle to get the support they need from governments and other financial institutions,” said Kiva CEO Neville Crawley in a statement. “This fund’s journey is ongoing and will be in place for months, even years, to come, as we continue to see the effects of COVID-19 on the general health and well being of businesses worldwide.”
Small businesses can continue to apply to Kiva for loans, which are zero interest and dispersed immediately. According to the nonprofit, the loans for U.S. businesses have averaged around $7,400, with a six-month grace period for repayments.
Earlier this year, entrepreneurs were given a lifeline by the federal government when it passed the CARES Act. That $2.2 trillion piece of legislation initiated a number of stimulus measures to bolster the U.S. economy, among them the Small Business Administration’s Paycheck Protection Program, which supplied loans to small- and midsize companies — that is, until the program expired on Aug. 8.
After weeks of debate, lawmakers in Washington remain at odds over the next stimulus plan, and experts now predict that the two parties will not reach a deal before the presidential election in November.
In the meantime, small businesses do have a few options to help them stay afloat. In addition to programs like Kiva’s, the SBA is continuing to offer its low-interest Economic Injury Disaster Loans. And Mainvest, an investment platform launched in 2018, offers a Kickstarter-like crowdfunding service to established mom-and-pops, allowing small businesses to rally financial support from their local community.