EDOs Respond to COVID-19 – IEDC Second Survey
Following up on an initial survey in early March, IEDC conducted a second survey of economic development organizations (open from March 30 to April 5) to get an update on their strategies for responding to COVID-19 and what challenges they are facing.
Out of 321 respondents, 33 percent are from rural-serving organizations; 25 percent serve suburban areas; 18 percent are urban-serving; 19 percent are regional, and just under 5 percent state, national or international.
Sixty-two percent of responding EDOs have 1-5 employees; 17 percent have 6-10 employees; 11 percent have 11-20 employees; and 10 percent have 21 or more employees.
Partnerships and common responses to help businesses. When asked which groups or organizations EDOs are partnering with to respond to business/community needs, the top five responses were:
- local or state government (94 percent)
- small business support organizations (89 percent)
- banks/lenders (63 percent)
- workforce development organizations (66 percent)
- community development groups (55 percent).
The survey asked what actions economic development organizations, and other partner organizations in a community, have taken so far to respond to COVID-19. Similar numbers of EDOs and community partners had created a webpage to push out information (87 percent and 94 percent, respectively), and started or were participating in a business recovery or response task force (76 and 78 percent, respectively). Sixty-two percent of EDOs and 71 percent of community partners have initiated a small business assistance program comprising loans, technical assistance or both. Partner groups, rather than EDOs, were more likely to have created a mechanism to connect job-seekers with current job openings.
In comments, many respondents noted that they were busy providing technical assistance for loan applications (e.g., webinars, 1:1 virtual counseling). Those that provide loans as part of their usual business were doing loan modifications and offering deferrals for borrowers on existing loans. Many EDOs are now working to development a disaster loan or grant program.
The main topics businesses are asking EDOs about include accessing federal and state resources (90 percent); accessing capital (79 percent); and avoiding layoffs (60 percent).
Operational challenges to EDOs. Respondents were asked what operational challenges their EDOs are facing, or expect to face, in the short, medium, and long term. In the short term (1-3 months), the most frequently mentioned topics included:
- Burned out staff, lack of capacity to keep up with overwhelming need for services/dramatic increase in clients
- Cash flow/decreased funding/loss of revenue (sales tax, hotel tax, interest income)
- Limitations of working from home
- Employee absences
- Staying connected to stakeholders
- Communications and keeping up to date on the changing business environment and legislative activities
- Change of strategy. Staff have shifted from previous program work to focusing on CV recovery
- Managing relevant information
- Slowed deal flow
Many of the same concerns were cited in the medium term and long term; “cash flow and funding” was the overwhelming concern in both periods, as well as staff layoffs and burnout.
Impacts to programs of work. Respondents were asked how the pandemic has impacted, or how they expect it to impact their EDO’s work in typical economic development activities. Selected comments include:
- Business retention and expansion: Shift to virtual visits; increased demand; will remain main focus; expansions will be limited
- Business attraction and marketing: Put on hold; less travel/investment in business attraction in 2020; more opportunities in medical supplies and services; pipeline of new projects significantly reduced
- Entrepreneurship and small business development: Closure of many existing small businesses and fewer startups; increased risk and aversion for some, new opportunities for others; this will be a bigger focus going forward
- Workforce development: Talent attraction not as important; initiatives on hold because schools are closed and students are not able to participate in the talent pipeline programs; LOTS of work to support employers as they navigate changes, as well as getting the information to dislocated employees to find those positions; too soon to tell
- FDI attraction/trade promotion: Dropping way down the list; decreased trade for local exporters; opportunities for reshoring; likely stalled; surprisingly no change in FDI inquiries, shifted to online vs in person
- Other programs of work: natural disaster planning continues to be at the forefront; tourism focus will be significant to restart small business; increased role in advocacy for business and inclusive economic growth; refocused research to better understand the economic impact this will have on our region
Business access to financial assistance. Asked about the extent to which their businesses have been able to access financial assistance from the public and private sectors, many responded that it was too early to tell. Many others also noted the difficulty of applying for SBA loans (e.g., a cumbersome application process; most small businesses not having accounting experience). Others noted that many small businesses are either not eligible for federal programs, or unable to repay loans and need grants.
EDOs and disaster preparedness. Twenty-five percent of respondents said they had experienced a disaster in the last 15 years that helped them be better prepared to respond to COVID-19. Of those who believe the experience made them better prepared, 54 percent said they had a continuity plan for internal operations in place; 38 percent had a business recovery task force in place; and 22 percent had a business recovery loan fund in place. Overall, those who had standing relationships with local agencies and organizations seem to have mobilized most successfully.
The survey asked respondents about continuity planning for EDO operations. The majority, 53 percent, responded that they did not have a continuity plan in place. Asked what they might do differently in regard to future disaster preparedness, either in terms of EDO continuity plans or plans to assist businesses, respondents commented:
- Improving communication with external stakeholders, allies and partners/build our database of contact information to better reach our businesses during a disaster
- Work on disaster preparedness as part of the strategic plan
- Have a committee specifically for disaster relief and preparedness
- A movement to more reserve funds
- Consider designing a disaster relief fund to be shelved and rolled out in response to another crisis
- Better setup for working remotely/beef up teleconferencing capabilities
- Focus more on resilience/recovery planning for businesses all the time/spend more time educating business owners about the types of disasters they should be prepared for
Sixty-four percent of EDOs said they are currently engaged in recovery planning. Many others said they had not had time yet, or that it was too early in the process. Actions mentioned in comments included:
- Working with DMO and City to get events back and help the hospitality sector
- We have a lot of mom and pop shops we need to help them to figure out succession plans and strategies for recovery, as well as marketing to bring about more customers.
- Double-down on support for broadband infrastructure expansion projects, "buy local" marketing campaigns, research essential business designations and develop attraction/ expansion strategies to increase number of essential manufacturers in service area
- Starting with existing loan and technical assistance clients. Deploying technical assistance providers to support individual business owners in development of recovery strategies for their individual businesses.
- With co-work spaces closed, we have asked our hotels to provide discounted space for those businesses to work in, several have agreed, others are considering.
- Currently measures are being discussed around how to better prepare existing business for disruption and mitigating risk. For recruitment, our staff is preparing strategies around promoting risk reduction via rural location in a post-Covid world.
- We are working to keep our customer base engaged and desiring to visit our summer tourism based community when they are able to. Planning for some blow out promotions to draw customers should we be able to have a season. Developing three scenarios based on slightly late season start, shortened season, and no season.