Helping Business Startups and Expansion in Springfield

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Springfield’s Technical Assistance Program (TAP)

An initiative of the City of Springfield and the Affiliated Chambers of Commerce of Greater Springfield

Problem Statement

The ethnic demographic of the City of Springfield has been changing over the past 10 years with a growing number of Latino and African American residents and fewer Caucasian residents. A number of neighborhoods in Springfield qualified under the federal Enterprise Community (EC) designation and the city applied for and received funding under that program. There was a need to develop economic opportunity in those EC neighborhoods so changing demographic groups could participate in Springfield’s economic revival.

Over the past 15 years, Springfield has suffered from the lack of available permitted land for development of industrial parks. It is only now in 2005 that the new Smith & Wesson 75-acre industrial park will open, making six fully permitted sites available for new industrial construction. Additionally, with only a limited number of incentives available for new business construction and/or relocation into Springfield, the city’s ability to attract new business and retain existing ones has been limited. This has necessitated a strategy of growing the Springfield economy from within by forming new business entities and expanding existing small businesses.

Over this 15-year period, the Springfield Technical Community College has been a driver of small business creation through its Scibelli Enterprise Center. The center is a small business incubator, which also houses the Massachusetts Small Business Development Center, the Western Massachusetts Enterprise Fund (a microlending entity), and the Service Corps of Retired Executives (SCORE). While these organizations matured and diversified, programs such as TAP filled in the necessary pieces of the puzzle so that new business creation in the City of Springfield could flourish.

This strategy of providing the necessary infrastructure for small business creation and growth has paid off handsomely for the city. For the last several years Springfield has outpaced the state in new business creation and private sector payroll growth. In April 2005, the U.S. Small Business Administration recognized Springfield as being a leader in small business creation. These small business startups create wealth within the city, and specifically in minority communities where entrepreneurs are often hesitant to approach traditional financing entities. They also assist in stabilizing troubled neighborhoods within the city.

One of the major initiatives of the State’s Financial Control Board, which now oversees the municipal finances of the City of Springfield, is to stabilize city neighborhoods through economic revitalization of neighborhood commercial districts. Over the last decade, the city and its partners have created a positive environment for small business. Numerous businesses that have started thanks to this environment have lead the way in revitalizing these commercial districts. These new business startups are providing Springfield with desperately needed revenue from personal property taxes and adding to the value of existing commercial properties.

The Solution: Springfield’s Techincal Assistance Program

Approximately five years ago, the City of Springfield’s Community Development Department approached the Affiliated Chambers of Commerce of Greater Springfield (ACCGS) and its president, Russell F. Denver, to see if the chamber would design a program to assist small businesses, specifically minority owned and startups, in what were then known as “enterprise neighborhoods” of Springfield. The ACCGS designed the Technical Assistance Program (called TAP), whereby grants of up to $5,000 per business/startup would be given for services rendered to those businesses in starting up or expanding.

Services covered by the grants include legal, accounting, marketing, business planning, advertising, and training of employees. The dollars committed to each business/ startup do not go directly to the named recipient. Instead, the funds go from the ACCGS to the vendor that provided the services for the recipient, after the recipients confirm that the work had been done to their complete satisfaction. Historically, the Springfield Community Development Department had given funds to various community development corporations to promote business development in the city’s neighborhoods. The ACCGS program is centrally administered and therefore requires less money for administration, given that there would be one location for TAP services for the entire city.

The ACCGS was able to utilize established collaborations it had with neighborhood business associations, local banks, and chamber members who provided the services listed above. At the beginning of the program, the vendors provided a 5 to 10 percent discount on services to the recipients in order to establish a business relationship with them.

Current status of program/funding. The City of Springfield initially funded the TAP program with a grant of $150,000 from the EC funding it received from the federal government. Originally the TAP grants were $5,000 per recipient and after administrative costs were taken into account TAP was able to assist 25 microenterprises during the first year. After two years, the City of Springfield’s EC funding ceased and the Community Development Department began funding the program. Annual funding has ranged from $64,000 to $150,000.

A number of additional funding sources for TAP were sought by the ACCGS. Most notably, the ACCGS approached the Springfield Media Telecommunications Group, which managed a fund from assessments on each cable television bill in the City of Springfield. The assessment funds went into a grant program to be used for technology and economic development projects. The chamber was awarded a $300,000 grant to give out in increments of $5,000 per company to help small and microbusiness enterprises gain access to new technologies that would help the businesses.

The majority of the funds were used to help microenterprises develop websites, provide technology training for their employees, and begin the process of interacting with their larger customers who more often than not required vendor transactions to be online rather than paper. This initiative was meant to make the microenterprise more productive and retain a number of larger clients.

In addition, the chamber used its influence to obtain approximately $25,000 from a number of local banks, which gave funding to assist TAP in building relationships between the local banks and microenterprises in specific neighborhoods of Springfield. The ACCGS is paid a small administrative fee for administering the grant, but the additional costs of administering the program are borne by the ACCGS as a way to assist in business development in Springfield. It is also a way to develop a referral system to a number of microenterprise lending sources, such as the Western Mass Enterprise Fund and the Greater Springfield Entrepreneurial Fund (GSEF). GSEF was shut down by federal authorities for a number of reasons including but not limited to embezzlement and mismanagement. The ACCGS subsequently assumed the administration of the program. The ACCGS has been successful in having TAP recipients use these and other financial resources to obtain loans from these microlending resources.

The amount of grant funding available per recipient was reduced several years ago from $5,000 to $2,500 so the chamber could assist more startups and small businesses. Unfortunately, due to some irregularities associated with the city’s Community Development Department, the total amount of grant dollars available was reduced by $30,000 in fiscal year 2004, so that only about $64,000 was available for grants. In fiscal 2005 approximately $66,000 is available, with about $51,500 committed to date. The ACCGS is currently in the process of applying for continued funding from the city’s Community Development Department.

Application process. Applicants for TAP funding must complete a written application form. It includes a description of how the grant dollars would be utilized (e.g. legal, accounting, marketing, business planning, advertising, or training). The applicant indicates the vendor to be used, fills out a Tax Certification Affidavit (which requires the recipient indicate that it owes no state, federal, or city taxes), and a Job Creation and/or Job Retention Agreement. The chamber receives the majority of its applicants from neighborhood councils, business associations, and vendors to past recipients, including a large number of minority business advisors (e.g. lawyers, accountants, and business planning professionals).

Additionally, each year the chamber works with local weekly and monthly news publications highlighting that the funds are available, how they will be distributed, and what the requirements are for a business to receive the funding. In the past, the chamber has also received favorable coverage about TAP from El Pueblo Latino, a Latino newspaper, An African American Point of View, an African American-owned monthly publication, and WTCC Radio, the community radio station located at Springfield Technical Community College.

The ACCGS also has worked with the New England Black Chamber of Commerce and the Latino Chamber of Commerce of Massachusetts for referrals. Approximately 50 percent of applications received are funded through this program. A waiting list has been created each year that TAP has been funded and whenever possible the businesses on the list from the previous fiscal year are served first in the next fiscal year. The ACCGS looks for cases in which the funding could help a business get access to loans and/or create or retain jobs. These attributes demonstrate to the chamber that there is some staying power associated with the funding received by the recipient.

Collaborations. The chamber has utilized existing business resources to ensure that TAP dollars are spent on business creation or expansion. Collaborations with the Massachusetts Small Business Development Center and SCORE for business counseling, and with the Western Mass Enterprise Fund for business loans, have proven valuable. Whenever the ACCGS believes that existing free services could be utilized, the recipient is steered in that direction. The Western Mass Enterprise Fund, which makes loans in amounts of $1,000 to $150,000, has received a number of referrals and made loans as a result of the TAP grants. Numerous Springfield businesses have used TAP grants to have business plans done for submittal to the Western Mass Enterprise Fund.

The chamber has also worked with the Community Focus Loan Program, a program established for members of the minority community in Springfield, and several loans have been given to TAP recipients. The ACCGS also has utilized its collaboration with the Black Chamber of Commerce of New England and The Massachusetts Latino Chamber of Commerce for referrals. In addition, the ACCGS has reached out to local banks, which have contributed approximately $25,000 over the course of the last four years for TAP grants. A number of Springfield entrepreneurs who have been turned down for bank loans as a result of not having proper financials and/or a business plan have received TAP grants and used them to get their accounting straightened out and/or create a business plan so they can return to the bank with the documentation needed to secure loans.

Success stories. Since the creation of the program, about 80 to 85 percent of the businesses assisted have been minority-owned with approximately a 50-50 split between male- and female-owned enterprises. Early on, most of the minority businesses helped were Hispanic businesses. Today, more African American businesses are being assisted. Additionally, well over 50 percent of the vendors of TAP recipients have been minority businesses/business professionals, so a new class of minority business advisors has benefited from the program. This further enhances business knowledge and wealth within the Springfield minority business community.

This circulation of dollars has essentially created a two-for-one benefit for each community development dollar expended. For example, the program currently provides grants of up to $2,500 per business recipient. If that recipient receives legal services from a minority attorney the recipient is receiving $2,500 of legal services. However, the minority attorney is also receiving payment for services rendered. Each receives $2,500 worth of services/payments. This has proven to be a very valuable item in the TAP toolbox.

Following are five of the many successful businesses that the TAP has helped through its grants:

  •  Appliance Plus, owned by Jasmine Cortez, is located on Main Street in the South End of Springfield, a predominantly Hispanic neighborhood. Her company buys used and discarded appliances, refurbishes them, and then sells the repaired appliances. Cortez approached the chamber about a TAP grant and after completing all the appropriate paperwork was given a $2,500 grant for creation of a business plan that was submitted to the Western Mass Enterprise Fund. Cortez chose Samuel Ortiz Professional Services, a Hispanic-owned, business consulting service that acts as an agent to the Western Mass Enterprise Fund. Ortiz prepared a business plan that enabled Cortez to receive a $40,000 loan, which Cortez used to purchase additional inventory and a truck so that her company could extend its business beyond Springfield into the northern Connecticut and Hartford areas. She has since hired two repair technicians—young Hispanic males who were students at Putnam Vocational High School. Cortez continues to see her business grow. 
  • Sweet Grace Bakery & Cake Shop is a fairly new business on Bridge Street in Springfield. Bernice Foster, an African American, opened her doors in early 2004 and immediately hired six African American women to do baking and retail sales at her facility. The storefront that the business occupies had been vacant for approximately five years. Foster has purchased commercial baking appliances in order to expand her business. TAP funds helped her to incorporate her business and deal with legal matters regarding her lease and allowed her to do a small amount of advertising. Foster has enhanced the quality of life for her six employees, all of whom are Springfield residents. A Springfield-based attorney did all of her legal work and the advertising was in communitybased weekly and/or monthly newspapers. 
  • Honey Bunny Fashions is a Latin/Brazilian clothing store owned by Noemi Graves and located on Chestnut Street just outside downtown Springfield. Honey Bunny Fashions, which has been in business for approximately four years, sells high-end women’s clothing, especially evening dancewear. Graves has two employees and her business continues to see growth from year to year. She has used her TAP funds for advertising. 
  • Minds Island is a women-owned business that began at the Springfield Technical Community College’s business incubator on the college campus. Minds Island is an online artist’s buying cooperative that allows artists to have images of their work online along with a biography of the artist. The website is http://www.mindsisland.com and has the capability for online purchases of the artwork. Having graduated from the business incubator, the business is now located at the Indian Orchard Mills, an old knitting mill building that is now home to approximately 45 small businesses. For a two-year fee of $800 per artist, TAP was allowed to place approximately 35 Springfieldbased professional artisans of all different art forms on Minds Island website. This helped the artists expand their ability to sell their products beyond the Greater Springfield area, allowing numerous Springfield-based artists to achieve greater success. 
  • Café Savannah, a restaurant/lounge with a Cajun theme, recently opened in Springfield. Sole proprietor Tony Taylor approached the ACCGS about three years ago for architectural assistance to create a floor plan and design of the restaurant and lounge. He received approximately $2,500 toward the cost of architectural services. The property he purchased on Main Street in the South End of Springfield had been vacant for about 10 years and was blighted and decaying. TAP awarded Taylor another $2,500, which will be used for advertising the grand opening of Café Savannah. The South End of Springfield has become a mini “gourmet restaurant alley” with a number of theme restaurants highlighting the ethnic diversity of Springfield. Total employment for Café Savannah will be more than 20 people, creating jobs that did not exist prior to the use of these TAP dollars.
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