Can a $10K state grant save a small business? These Tacoma restaurants say yes

Jennifer Richardson has tried to catch every one of Gov. Jay Inslee’s press conferences since March, each time wondering what today’s coronavirus news meant for the young Tacoma cafe she owns with her two sisters, Adina and Sarah Joslyn.

Was help for the small businesses that employ more than half of private-sector workers in Washington state on the table today?

One night in early April, the governor announced a small-footprint grant program for micro-businesses. Richardson instantly turned to her computer, followed his directions to the application and began filling in the blanks.

By this point, she was well versed in asking for money to save Red Elm Cafe.

She already had applied for an Economic Industry Disaster Loan, an ongoing Small Business Administration program that involved a lengthy application, as well as a Paycheck Protection Program loan. The first application was long and confusing, she said; the PPP application was simpler, but the bank initially rejected it, leaving the cafe to stumble through April’s quicksand of question marks without relief.

Rather than stay open for takeout as the state’s stay-at-home orders began in March, the sisters closed the cafe and laid off their handful of employees, sending them home with the remaining perishables — bread, butter, milk, eggs.

Richardson, a former health care worker, thought America would turn around quickly; her sisters were “a little less optimistic,” she said. As the weeks pressed on, she knew they would need more than good luck and grit to survive the deleterious effects of the pandemic.

They needed money.

The state program — $10 million distributed to more than 1,000 small businesses in increments up to $10,000 — was funded through a combination of Working Washington reserves and a sliver of the $200 million relief package approved by the state Legislature in March. Unlike the PPP, only businesses with up to 10 employees were eligible.

Also unlike the federal program, the state funding was far less restrictive.

“The PPP money could not be used to buy food, to buy inventory, and we had to re-buy absolutely everything,” said Richardson. “In the process of paying rent and utilities, and even paying ourselves a little so we could continue to pay our mortgages and rent, our bank account had really decreased. The amount of money we had wasn’t much.”

In just 11 days in April, the state received more than 25,000 applications from businesses in all 39 counties, leaving the awarding process up to local economic development boards. Food businesses accounted for 14 of the initial 76 Pierce County recipients, including several others in Tacoma: Airport Tavern, Celebrity Cake Studio, Devil’s Reef, Kim Anh Restaurant and North China Gardens. Elsewhere in the county, awards went to Fox Island Grocery, Frey Family Farm in Ashford, Java Angels in Bonney Lake, and in Gig Harbor, LeLe and Occasions Coffee and Crepes.

A second round of funding awarded dozens more businesses, including 10 more in Pierce County. Southern Kitchen was the only restaurant on that list.

A few thousand dollars might seem paltry when compared to the billions flying around in federal programs, but for these local businesses, the cash can move mountains.

That Red Elm was chosen meant that the cafe could reopen, said Richardson.

“We weren’t planning for this much of a catastrophe,” she said. “We plan for snowstorms or a windstorm, a power outage — we’ve actually had those occur since we’ve been in business, and we handled that really well — but this was bigger than we had planned for.”

The Working Washington grants asked personal questions about how the money would be spent, whereas the PPP application was a few simple pages of basic company information and financials.

“You actually had to write down a narrative about what you were gonna use the money for or why it was important. I was just honest,” said Richardson. “It would mean we could buy inventory, and it would mean we could open our doors.”

SMALL GRANT, BIG HELP

Around the corner of Martin Luther King Jr. Way, Cassandra Williams faced a similar quandary.

Her catering and bakery business, Love by the Slice, should have been “knee-deep” in weddings, baby showers and other celebratory events.

“When COVID hit, we just got this complete lull: nothing,” she told The News Tribune in an interview.

She applied for and received a small PPP loan, which allowed her to keep her employees working, but the prospect of the state grant, with no strings attached, “presented a huge opportunity.”

“I dreamed with this grant,” she said. “I closed my eyes and asked myself, ‘If I had $10,000, what would I do with it?’ I need to have adequate support, and I want to invest in my employees. If I take care of my employees, they’ll take care of my business.”

As a Black business owner, she knew she was already beating the odds.

“When you’re a small business like me, it’s not an unknown reality that minority businesses many times are under-capitalized,” she said.

According to a 2017 U.S. Department of Commerce report, minority-owned businesses are less likely to receive loans, and when they do, they tend to be about half the amount of those awarded to their white counterparts. They also tend to pay higher interest rates, on top of starting off with far less capital. In a 50th anniversary analysis of the Kerner Commission on racial inequality in the United States, the Economic Policy Institute found that the median Black family in 2016 held just one-tenth the wealth of a white family.

“Every penny counts,” said Williams. “So when you have an opportunity or an access to revenue that simply focuses on operations, I mean, that’s huge because you can really leverage what you have and take those dollars and just get that much further down the road.”

The $10,000 grant means that, for the first time, she has the financial confidence to hire experienced workers, versus simply hiring to “fill holes.”

“It’s capital that I probably needed when I first opened the doors,” she continued. “You have to do so much yourself. You’re using your own resources to get started, and you just work with skeleton crews. A lot of people burn out and don’t make it.”

Now, rather than simply scrape by and wish for the best, she is looking beyond the pandemic.

“It just gave me the flexibility to take the resources that I already had in hand, focus on making sure we could keep the doors open, but we were also able to be made whole through the funding,” she said.

The cushion also allowed her to nurture Revive Washington, a “box and drop” food program she started with a friend that distributes supplies to at-risk neighbors who can’t travel to their local food bank.

“I really feel blessed to have received the award because it doesn’t happen to people every day,” said Williams. “It was right on time.”

This story was originally published August 11, 2020 at 1:05 PM.