About a third of Denver’s small businesses and a third of its nonprofits that applied for more than $15 million in emergency federal stimulus grants received one. And even then, those downtown saw more payouts than anywhere else, city data shows.
Some city council members and economic experts question whether Denver distributed the federal money equitably and paid enough attention to the city’s outer neighborhoods that might bounce back slower than the inner core. But city officials say the disparity between organizations that received the money — a max of $7,500 for small businesses and $15,000 for nonprofits — came because downtown has a greater density of both.
Denver is expecting more federal money from the $1.9 trillion stimulus bill that was signed into law Thursday — possibly as much as the $227 million it saw last year from the Coronavirus Aid, Relief and Economic Security (CARES) Act. Business owners and city officials say the need remains, but it’s key that people are aware of available resources and are able to navigate the application process moving forward.
Emmanuel Alvarez and his father co-own La Michoacana Premium, a Green Valley Ranch ice cream shop. Alvarez said it was particularly challenging for Latinos to find information about the grants.
He and his father weren’t sure how to apply for the first round of grants so they had their accountant handle it. They were rejected — and nobody around them received a grant either. This was particularly frustrating because the family owns a store in Chicago, too, where they received a $20,000 grant just a few weeks into the pandemic.
“It’s kind of like the city was playing Russian Roulette,” Alvarez said of Denver. “Who gets the grant and who doesn’t? Who survives and who doesn’t?”
For this reason, city officials should take a closer look at how and to whom they dole out grants, according to Jack Strauss, the Miller Chair of Applied Economics at the University of Denver.
“Geography may matter. Being close to downtown, having contacts may help,” Strauss said. “The process had to be at least a little haphazard. There’s no way, even if you were a visionary, that you could have gotten it perfect.”
Denver Mayor Michael Hancock often stresses the need to approach recovery efforts with an equity lens and officials in the city’s economic development office say about 68% of the 2,085 small business grants from the federal CARES Act went to businesses owned by women and/or people of color.
Nearly 8,000 grant applications
More than 7,000 small businesses applied for an emergency CARES Act grant and 2,085 were approved, according to data provided by Denver’s Office of Economic Development & Opportunity.
On the nonprofit side, 903 applied for grants, 301 of which were accepted. Sixty-one of those nonprofit grants were given to organizations outside of Denver because they serve Denver residents, said Chelsea Rosty, the department’s marketing and communications director.
Because small-business grant amounts are partially based on the amount of revenue lost due to the pandemic, the specific amount given to each business is private, Rosty said. But the average business received $5,822.
To qualify for a small business grant, organizations must make $2 million or less in annual revenue, employ 25 people or fewer and have seen at least 25% revenue decline since 2019 because of the pandemic, among other qualifications, Rosty said.
Priority was given to industries most affected by the pandemic, like retail, restaurants and personal care, as well as places that had trouble making rent.
The city also prioritized businesses in Globeville, Elyria, Swansea, Northeast Park Hill, East Colfax, Montbello, Sun Valley, Valverde, Villa Park, West Colfax and Westwood. Those neighborhoods fit within the city’s 2018 initiative for Neighborhood Equity & Stabilization (NEST) to protect highly developed areas from gentrification.
Demographic data for nearly a third of the businesses that received grants was not available, Rosty said. But of businesses that did provide that information, 31.2% are woman-owned, 19.2% owned by people of color and 17.4% owned by women of color.
Rosty said small nonprofits operating within the neighborhoods listed above and those that serve vulnerable populations also received priority.
“It’s a laundry list of bureaucracy”
Gwen Scherer found out that the location of one of her four MemoryWise analog-to-digital transfer stores was a challenge to getting one of the grants. It’s on the Littleton border, though it’s certainly within Denver’s city limits.
But Denver officials rejected her initial application. “They said ‘You don’t qualify because you’re not in the city of Denver,” Scherer said.
The solution was simple enough: Scherer said she offered up tax identification details and the denial was reversed after just a day or two. She received the $7,500 grant in mid-June “when it was most needed.”
Councilman Kevin Flynn, whose district covers the city’s southwest side where Scherer’s store is located, said he heard of a similar problem with at least one other business, though he declined to name the store.
The problem pops up from time to time, Scherer said, and it’s usually an easy fix. Although when she applied in April for a small business grant from Facebook, she was denied again for the same reason. She couldn’t convince the tech giant otherwise.
“I got nowhere with it,” Scherer said. “They weren’t going to do that for one small business.”
A spokesperson for Facebook confirmed that the zip code for Scherer’s business was not eligible for the grant.
Flynn’s southwest district includes Bear Valley, Harvey Park, Marston and Fort Logan — and city data shows the district received just 43 small business grants and four nonprofit grants.
“We’re a bedroom community down here. We don’t have a lot of the nonprofit base, we don’t have a lot of the offices, commercial areas,” Flynn said. “I don’t think equity means that I have the same number of grants.”
But City Council President Stacie Gilmore was less sure that the distribution was equal. Sure, downtown has a higher density of businesses and nonprofits, she said, but questioned whether that was enough of a justification for such a strong disparity.
Gilmore’s district received 66 small business grants and eight nonprofit grants, and believes her area is commonly overlooked. She knows of at least a dozen more nonprofits in her northeast district, which includes Green Valley Ranch and Denver International Airport, that could have used a grant.
“We’re dealing with every other disparity here too, health care disparity, higher rates of COVID-positive cases, hospitalizations, deaths,” Gilmore said.
Both Gilmore and Flynn’s districts pale in comparison to 9th District Councilwoman Candi CdeBaca’s area, which includes the Central Business and River North Arts districts. It received 419 small business grants and 74 nonprofit grants.
DU’s Strauss noted that downtown businesses and nonprofits are in a better position to pool their resources in applying for grants — something that Gilmore said is more of a challenge for people on Denver’s periphery.
“It’s a laundry list of bureaucracy,” Gilmore said. “Who has time at the end of a 12-hour day to go home and say ‘OK, I fed the kids, I took a shower, now let me get on the city’s website and fill out the necessary paperwork and pull the documents?’”
CdeBaca agreed and wondered how many of the grants in her own district went to the Central Business District at the expense of Globeville, Elyria and Swansea. She also cautioned that basing grants on past revenue could disadvantage startups or new businesses.
Gilmore believes the resiliency of the businesses on the city’s outer edges need to be taken into consideration if the city offers a second round of federal grants.
That tracks with Scherer’s experience. Of her four stores in Boulder, Wheat Ridge, Lone Tree and Denver, the store on the Denver/Littleton border bounced back the slowest, she said.
“It really lagged behind the others when things reopened,” Scherer said. “That was why I felt like I needed additional, continuing assistance.”
Updated 11:30 a.m. March 13, 2021: An earlier version of this story included the wrong district number for Councilwoman Candi CdeBaca. She represents the 9th District.