California Communities for Financial Resilience
By Annika Schneider, Jowy Tani, Lucy Svoboda, and Maddie Pei
Executive Summary
The Small Business Association’s Paycheck Protection Program (PPP) – intended to support small businesses with payroll during the COVID-19 pandemic – exposed the extreme inequities of disaster relief programs in California and the U.S. more broadly. It was evident from the “winners and losers” of the first round of loans that one’s network and resources pre-disaster dictated their financial resiliency and ability to access loans post-disaster.
The Problem
Of the 4 million small businesses in California, our research showed a stark contrast in navigating the PPP loan process between those with and without social capital. True “small” businesses, especially those managed by historically underrepresented groups, were locked out of the first round of PPP, facing many institutional barriers, whereas venture-backed startups and other well-resourced and well-connected businesses were able to secure million dollar loans in the first round.
In approaching a redesign to this experience, there were many potential areas of focus, but we saw the largest area of improvement around the following question:
How might we democratize access to informal information and networks to continuously help small business owners who lack social capital?
Our Solution
In response, we are proposing the development of an online exchange – California Communities for Financial Resilience (CA CFR) – to enhance access, clarity, trust, and community. This platform will be built to extend past this crisis, serving as a go-to, year-round community for small businesses to connect whenever they are in a pinch.
Specifically, the all-in-one platform will offer Quora-like verification of posts supervised by the California Governor's Office of Business and Economic Development (GO-Biz), upvote functionality as seen in Reddit to identify top needs, a chatbot feature like Intercom to triage needs, a heat map to facilitate closeby connections and a financial health test to detect potential vulnerabilities ahead of disasters. In order to implement CA CFR, we propose a close partnership between GO-Biz and private sector companies (notably banks and technology companies).
A public sector office such as GoBiz brings essential legitimacy to the platform and can verify information shared by business-owners in order to offer a single source of truth. The private sector, on the other hand, can provide the capital, speed, and innovation to build a scalable and intelligent platform.
With California in a constant state of disaster, the time is now to invest more deeply in communities and amplify peer-to-peer connections in a centralized and scalable way. By promoting disaster preparedness, CA CFR could become a sustainable online community that will build the trust, competencies, and network necessary to navigate the next disaster.
On June 3rd, 2020 the Redesigning Finance students presented their work via Zoom to a panel of experts working in the finance sector.
