Austin City Council advanced $2.18 million in financing and entrepreneurship programs for small businesses on Sept. 24. The package covers loan interest support, matching microloan funds and a new pitch competition.
The three programs address different needs, from borrowing costs to early business concepts. Their expected benefits remain projections, including estimates for the number of businesses and loans they could support.
According to Community Impact’s report, the largest contract involves Austin nonprofit PeopleFund. Smaller agreements involve nonprofit lender Kiva and the University of Texas at Austin McCombs School of Business.
PeopleFund Pilot Targets Borrowing Costs
The council advanced a contract of up to $1.5 million with PeopleFund for a loan interest buydown pilot. The program is intended to lower interest rates for eligible businesses toward competitive market rates.
City subsidies of half a million dollars are expected to support $3 million to $4 million in lending. The first-year projection is assistance for 75 to 100 businesses.
The planned savings would allow participating businesses to invest in operations, local employees and growth plans. Those outcomes are the pilot’s stated aims, rather than results from an already completed program.
PeopleFund received the highest score in the public solicitation to manage the pilot. That selection process drew three submissions.
Kiva Matching Funds Cover Three Business Groups
A separate $432,000 contract gives San Francisco-based Kiva responsibility for managing matching revolving funds. The initiative builds on the Austin Kiva Hub microloan program, which launched in March.
The existing hub offers limited business funding without interest or fees through peer-to-peer lending. The new funds are intended to expand support within that program.
The matching funds cover a Childcare Businesses Fund, Business Interruption Fund and Small Business Skills Graduate Fund. Businesses fitting those categories will be eligible for 2:1 matches.
The city’s agenda document says matching funds should help loans become funded faster. It also anticipates a higher proportion of loans reaching their full funding amount.
These funds are revolving: money repaid by borrowers becomes available for loans to new borrowers. The city expects the initiative to fund and match 200 microloans.
The projected total economic impact is $1.4 million over several years. That estimate concerns the Kiva initiative, rather than the PeopleFund pilot or the entire council package.
Pitch Competition Will Serve Early-Stage Businesses
The third agreement is a $250,000 contract with UT Austin’s McCombs School of Business. It will support development of a small business pitch competition facilitated by the city and UT’s TEXAS Entrepreneurship.
Businesses in planning or startup phases will be able to present their concepts before judges. Participants will compete for prizes, with further program information expected next year, according to the report.
Austin Economic Development Director Mac Cummins identified access to capital as a significant challenge for small businesses. He said the programs would give entrepreneurs more options for obtaining resources.
Cummins described lower borrowing costs and community investment as intended benefits. For the pitch competition, the next disclosed step is the release of further details about the program.