Since the coronavirus took hold in the United States in the spring, small businesses have been hit hard by the country’s economic woes.
A July study by LendingTree estimated that up to 40% of small businesses in the country’s largest cities were at risk of shutting down permanently without a return to normalcy soon. And according to the US Chamber of Commerce, businesses run by women and minorities have been disproportionately affected by the recession.
That’s why actress Sofia Vergara and the nonprofit microfinance association Kiva are raising funds for these particular groups of business owners.
Four months ago, Vergara partnered with Kiva to launch the COVID-19 Response fund with the goal of raising $ 50 million for small and medium-sized businesses run by minorities and women around the world. To date, the fund has raised $ 60 million through crowdsourcing, which has already gone to more than 70,000 marginalized businesses in the United States and abroad. About 84% of the loans went to women-owned businesses. And 70% of American recipients were led by Blacks, Aboriginals or people of color.
“When COVID-19 hit, I immediately knew I wanted to do something to help those who have been most significantly affected,” Vergara said in a statement. “I have long supported microfinance efforts and have seen the impact that lending to small businesses can have on marginalized communities, especially women-owned businesses.”
In total, more than 250,000 people have invested the COVID-19 Response fund. But some big companies have participated as well, including DoorDash, PayPal, and eBay. And more recently, retail giant Walmart joined the effort by donating the proceeds from the sale of face masks.
“We launched the fund to accelerate the necessary loans required to support entrepreneurs and small business owners affected by the coronavirus pandemic, who have traditionally struggled to get the support they need from governments and other financial institutions. Kiva CEO Neville Crawley said in a statement. “The journey of this fund is underway and will be in place for months, if not years, to come, as we continue to see the effects of COVID-19 on the health and general well-being of businesses around the world. . “
Small businesses can continue to apply to Kiva for loans, which bear no interest and are immediately dispersed. According to the association, loans to US businesses have averaged about $ 7,400, with a six-month grace period for repayments.
Earlier this year, the federal government gave entrepreneurs a lifeline when it passed the CARES Act. This $ 2.2 trillion bill launched a number of stimulus measures to support the U.S. economy, including the Small Business Administration’s Paycheck Protection Program, which provided loans to small and large businesses. medium-sized enterprises, that is, until the program expires on August 8.
After weeks of debate, lawmakers in Washington remain at odds over the next stimulus package, and experts now predict that the two sides will not reach a deal until the presidential election in November.
In the meantime, small businesses have some options to help them stay afloat. In addition to programs like Kiva’s, the SBA continues to offer its economic disaster loans at low interest rates. And Mainvest, an investment platform launched in 2018, offers a Kickstarter-style crowdfunding service to established moms and dads, allowing small businesses to rally financial support from their local community.