Public-private partnerships and small businesses: A conversation on what is working in New York City

This conversation took place at the Mastercard Strive USA Summit in New York City between Kevin D. Kim, Commissioner of the NYC Department of Small Business Services, and Shamina Singh, Founder & President of the Mastercard Center for Inclusive Growth. The language has been edited for length and clarity.

Shamina Singh: Commissioner Kim, thank you for taking the time to chat today and attending the inaugural Strive USA Summit. To get us started, can you provide your perspective on the role and importance of small businesses in New York City’s economy?

Commissioner Kim: Small businesses are going to lead the economic recovery and growth of New York City. Two years post-Covid, we can see that one in every six small businesses in existence today started since Mayor Adams’s administration began in January 2022. A record number of private sector jobs, over four million, have also been created in the last few years, a million of which were contributed by small businesses. Inclusive economic growth and the success of our small business sector go hand in hand.

Shamina Singh: That number — that one in six of all small businesses in New York City today have been started in the last few years — is fascinating, and reflective of some of the broader trends we have observed nationally.

Starting a small business is not easy, especially since access to affordable capital remains such a big challenge. Can you talk a little bit about how New York City has helped entrepreneurs access financing so they can launch and grow new businesses?

Commissioner Kim: We have done a lot to make it easier for entrepreneurs to get start-up capital, but we’re particularly proud to have created the largest public-private partnership fund directed at small businesses− the NYC Small Business Opportunity Fund. The Mastercard Center for Inclusive Growth and Goldman Sachs were founding partners, and we were able to leverage not just the money, but their involvement from day one to help co-develop the entire program. As of fund close, SBS and partners have deployed loans totaling more than $85 million in affordable, low-interest capital to 1,046 businesses across the five boroughs.

We’re very proud of the results so far, but even prouder to say that 80 percent of the recipients are minority- and women-owned enterprises. A major goal of the fund was to build the infrastructure required to support historically underserved communities, along with the broader goal of providing loans to small businesses. That is where our eight community financial institution partners played a critical role — reaching out to specific communities and building the capacity of the fund.

From day one this was a public-private partnership. And the work wasn’t just about this fund, but building a model that would serve us well into the future.

Shamina Singh: That’s amazing. I hadn’t realized that you had reached over 1,000 businesses. When you’re able to bring together the complementary assets of different partners, that is where the magic really happens.

But public-private partnership can also be challenging. Can you talk about how you anticipated and/or managed these challenges?

Commissioner Kim: The Opportunity Fund is not perfect, but it is a good blueprint for the future. And we have learned a lot of lessons. For example, when the private sector is thinking about working with the government, oftentimes they automatically jump to, “Oh, I’m going to have to deal with a lot of red tape and bureaucratic hurdles.” That is true in some ways, but the private sector can also help us overcome many of these hurdles by helping streamline operations and providing different types of capital that allow us to offer better products to small businesses. And on our side in government, we can leverage our resources, networks, and megaphone to promote the work. For this fund, for example, we focused a lot on getting the word out and had over 11,000 entrepreneurs reach out within the first two weeks. Together we can build a very powerful tool.

Shamina Singh: I am very proud of the role Mastercard played in the Opportunity Fund, and it shows how corporations can be important partners in the work you do. You mentioned that Community Development Financial Institutions (CDFIs) have also played important roles. What is your perspective on the role they played in the fund, as well as how they can help grow and sustain small businesses going forward?

Commissioner Kim: If you get to know the personal stories of small businesses in New York City, you quickly realize the critical role that CDFIs play.

One example is a small business that Mayor Adams cited in his State of the City address. There is a burger restaurant called Nowon in NoHo that is very well-known for its kimchi burgers. The owner, Jae Lee, went to a traditional bank for capital to expand to a second location and was not able to get a loan, even though he had a successful business. A Community Development Financial Institution, Renaissance, ultimately provided the funding and now he has a second location in Bushwick, Brooklyn, which has been very successful. He was able to hire dozens of people and now employs more than 50 people across the two locations. With that story, you can clearly see the role that CDFIs have played in job creation and business expansion.

Another story that comes to mind is an independent coffee shop in upper Manhattan with four locations that was doing well but had difficulty securing capital to start a roastery. Accompany Capital helped Jae to secure an Opportunity Fund loan and now that company is not only selling coffee directly but is planning to launch a roastery that would also be available to fellow coffee shop owners. That is important because when you are trying to compete against major coffee chains, you need to be a little bit different and also hyper-local, and this investment made that happen.

Shamina Singh: Those are great stories and reinforce the importance of being able to access capital to grow your business. But there are other important success factors for a small business, such as the ability to be flexible and nimble so they can take advantage of opportunities when they present themselves. Can you provide some examples of how the NYC government has leaned into innovation to help improve the success rate of small businesses?

Commissioner Kim: The two biggest challenges we talk about at my agency are access to capital and navigating through government. To address the latter point, we created a separate New York City Business Express Service Team, or NYC BEST, to help small businesses get the exact information they need when they need it, and it has been a huge success. We’ve seen, for example, the biggest impact in terms of our ability to speed up the process of getting business permits.

But getting small businesses the support they need often means going back to the basics, like being able to provide simple answers to questions on how to find capital, and then making it very easy for them to get this information. One example here is the Biden-Harris Administration’s support for a one-stop shop for capital access for small businesses, which we launched here in New York City with our partner Next Street. The service not only brings different financial service providers onto a single platform, but it also centralizes information from local, state, and federal programs related to small business support.

No one else in the country has done this. So now a small business owner can go online and type in their needs and the service will list all the local, state, and federal loan and grant programs. They can also connect directly with a financing expert.

It is important to say this is not just a technology solution because it first requires getting the right stakeholders together paired with the right incentives. It epitomizes how access to capital, how raising the profile of CDFIs, and how we can make it easier for small businesses to get support all reinforce each other.

Shamina Singh: That’s really great. Those challenges remind me of my parents who came to the U.S. from India and became small business owners in southern Virginia where they owned a rug store. I witnessed how hard it was for them to start their business and grow, especially since English was not my mother’s first language. They had a really hard time navigating the different licensing requirements and getting financing. So using technology to make the process easier, but also putting a human face and a human voice on it, is such an important part of the work you do.

Commissioner Kim: Similar to your experience, my parents were also immigrants who started a small business. They came from South Korea in 1975 and all of us — my parents, me and my sister, and my maternal grandmother — all lived in a one-bedroom apartment in Queens. My grandmother took care of my sister and me while my mother, who also didn’t speak English very well, and my father focused on growing a business designing artificial flowers. My mother would do the designs and my father would take her designs to the garment district and knock on the doors of wholesalers until people started buying their designs. It took them about seven years to build up a business.

Like you, I observed how hard it was for an immigrant small business owner to be successful. In New York City, almost half of all small businesses are owned by an immigrant. And in city government we are always asking if there is something we can do, even if it is only a little bit, to help small business owners achieve the American dream.

We are also always trying to learn from other cities, which is why we are in touch with the small business agencies of other cities around the country and have an open dialogue with them.

Shamina Singh: How are you leveraging new technologies such as Artificial Intelligence (AI) to improve the services you provide?

Commissioner Kim: We are now using AI to help small businesses find resources quicker and more efficiently. On our website, we now have an AI chatbot where a business owner can type in, for example, ‘How do I open a new restaurant?’ They’ll be able to get an immediate answer 24/7 in 11 languages.

Of course, with AI, we need to be incredibly careful to protect privacy and not inadvertently reference any false information. To protect against those risks, inquiries are not linked to specific businesses and any information stored is deleted every 30 days. We’re already had close to 10,000 businesses use the chatbot. And importantly, we see this use of AI as a way to supplement, not displace, jobs.

Shamina Singh: So where do we go from here?

Commissioner Kim: I think a lot of the solutions lie with public-private partnerships. As one example, we will launch another fund for small businesses soon using the same public-private structure as the Opportunity Fund given its success.

But public-private collaboration needs to be even broader. It should start with having an open line of communication. What Strive USA is doing is great, for example, and we want to continue to be part of it as thought partners, implementers, and other roles where we may provide value. Together we can continue to do great things.