Our view: Micro-grants miss the mark

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Editorial Board, Sept. 25, 2011, to January 2012

  • Scott Stanford, general manager
  • Brent Boyer, editor
  • Tom Ross, reporter

Contact the editorial board at 970-871-4221 or editor@SteamboatToday.com. Would you like to be a member of the board? Fill out a letter of interest now.

The city of Steamboat Springs’ micro-grant program for small businesses is a well-intentioned but poorly executed effort to spur local economic development.

Instead, the city ought to consider a loan program that would allow that seed money to be used again by other promising small-business ventures or more broad-based efforts that could impact a greater number of local businesses.

The micro-grant program is part of the city’s economic development policy developed within the past year to help Steamboat Springs preserve and promote existing assets as well as increase economic diversity and worker pay. There’s a lot to like about the policy, and we’ve been vocal about the city’s need to focus on economic initiatives. The city has realized some successes in the past year, such as negotiating an extended lease and facility improvements with SmartWool and offering an incentive for ACZ Laboratories to expand its west Steamboat facility that employs about 50 people.

The city also has approved several micro-grants for local small-business startups as well as existing businesses that needed a bit of a cash boost to continue to grow. According to the city’s micro-grant program, businesses can apply for up to $5,000 if they meet several criteria, including being located within city limits, demonstrating other seed capital and presenting a business plan that demonstrates a return on investment. The business also can’t compete directly with an existing Steamboat business. As part of the micro-grant application, businesses are asked how many new jobs they will create within the community.

But the micro-grant program is inherently flawed. First, we question whether giving businesses a couple thousand dollars is anything more than symbolic in terms of the impact that money actually can have on moving a venture from idea to reality.

Second, the program puts the city in the awkward and unnecessary position of having to decide which ideas are worth funding and which aren’t. The city said it doesn’t want to offer grants to businesses that might compete with existing Steamboat companies. That line gets gray rather quickly. For example, the city already has approved a micro-grant for Sober Guys, a service that drives home customers, and their vehicles, who have been out drinking. How does that not compete with Go Alpine?

Third, once the micro-grant is approved, that taxpayer money is gone. In theory, the funds will eventually help to create new jobs and a stronger tax base. But what if they don’t? There’s no recourse for the city, or taxpayers, to recoup their investment.

If the city is intent on giving money to small businesses, then make it a micro-loan program that provides low- or zero-interest funds to promising startups. That money then will be paid back to the program, thereby providing a revolving door of funds than can help the next wave of bright ideas.

Or perhaps better yet, the city should continue to look at broader-based ways to improve the local business climate. Technology infrastructure would be a good place to start. Investing there could help the entirety of Steamboat Springs businesses, from those that have called Routt County home for 100 years to those that might occupy retail and office spaces in the future.

Comments

sledneck 2 years, 8 months ago

Can a case REALLY be made that this program, how ever well-intentioned, is important enough to forcibly take resources from those who earned them?

Can we really look a small child in the eyes and honestly say "We are comfortable taking your mommys money; funds she could have used to buy you food, medicine, a winter coat, a Christmas toy, or heat for your home. We are not ashamed of doing this because we think this micro-grant program is more important than your needs, little child."

Anyone who defends this while calling themselves compassionate needs to buy a dictionary.

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Scott Wedel 2 years, 8 months ago

"If the city is intent on giving money to small businesses"

Which, after giving millions to big businesses only seems fair.

So one bad idea expands to another bad idea.

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George Danellis 2 years, 8 months ago

Thanks for taking on this issue.

You note the challenge of the gray area of choosing businesses that are not in competition with existing businesses. Creating guidelines around that is indeed challenging. However the example you site doesn't seem wholly valid. From what you share the Sober Guys service provides a value added service when compared with Go Alpine as it relates to inebriated vehicle owners. Go Alpine does a great job of transporting these types of customers. Sober Guys seems to be targeting the particular need of people who wish to wake up and have their vehicle with them. This goes double for in winter when there is a cost to leaving your vehicle on the roadside or in a parking lot. From this perspective, Sober Guys are offering an innovative service that currently is not available in the local marketplace, that also stands to reduce the number of dangerous drivers on the road.

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Jeff_Kibler 2 years, 8 months ago

Micro-LOANS have been successful in many third world countries. Make these chosen businesses pay it back. Many poor women have received loans as small as $5 and most have settled their debts.

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mavis 2 years, 8 months ago

NO kidding..... Only if the City AND county had thier stuff together would this be ok. Really???? Even if it was remotely OK ther are plenty of small companies that have been supporting their employees and businesses for GENERATIONS LONGER then the companies recieving support. The ENTIRE IDEA behind this is not ok and further supports how the government can't make good decisions at this point and we need to evaluate it at some point!!!

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