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Financial Access and Capability

Communities Step Up to Address Economic Impact of COVID-19

Molly Hubbert Doyle

April 01, 2020

As COVID-19 spreads across the country, communities are seeing businesses closed and jobs lost. This will mean tough financial decisions for small business owners, service industry workers and underserved neighborhoods.

The financial impact of illness and loss of work will disproportionately affect lower-income families. Many are already dealing with lack of emergency savings, food insecurity and limited healthcare options. According to a 2019 report from the Federal Reserve Board of Governors, about 40 percent of Americans would not be able to come up with $400 in a crisis.

Provisions in the $2 trillion stimulus package recently approved by Congress give some support, but that’s only part of the picture. At local and national levels, nonprofits, government agencies, funders and financial institutions are all working to mitigate this economic shock for households and businesses. We’re sharing an initial snapshot of community activities and resources, with expectation of more to come.

Keeping Households Financially Stable

Community-based organizations serving low- and moderate-income individuals and families are responding to the coronavirus crisis by modifying their service models and, when possible, stepping in with emergency funds. In Dallas, for example, nonprofit CitySquare is providing food and short-term rental and financial assistance.

“At CitySquare, we are seeing an influx of first-time visitors to our food pantry, about 50 first-time families a day, and an influx of phone calls inquiring about short-term financial assistance,” said John Siburt, president and chief operating officer. “Many of our neighbors working in hospitality and culinary jobs are now out of work. We are mobilizing to help them weather this crisis financially. We’ve also established an emergency relief fund to ensure we can respond quickly to the increased needs of those we serve.”

Government leaders have also announced supports to provide relief. The Internal Revenue Service has extended the national income tax filing deadline for individuals and businesses from April 15 to July 15. The U.S. Department of Housing and Urban Development (HUD) announced a halt to foreclosures and evictions on Federal Housing Administration-insured mortgages and HUD-supported rental housing. Following many similar actions at the city and county levels, the Texas Supreme Court has temporarily suspended residential eviction proceedings to help Texans who have experienced loss of income.

Household Financial Resources

Helping Displaced Workers

As workplaces close nationwide, people in the restaurant, retail, travel and hospitality industries are experiencing layoffs and furloughs. Workers whose employment has been affected by the coronavirus can apply for unemployment benefits through their state.

Community organizations are helping displaced workers find alternative jobs. In North Texas, Communities Foundation of Texas (CFT) launched Get Shift Done, an initiative that connects displaced restaurant workers with jobs at local nonprofits providing hunger relief.

“The COVID-19 crisis has caused service workers to lose their paychecks, as well as a spike in the need for labor to help meet the nutrition needs of our at-risk populations. At the same time, volunteers who usually work shifts at nonprofits are less available,” said Sejal Desai, CFT’s business engagement director. “We’ve partnered with the North Texas Food Bank and other organizations to provide more than $250,000 in wages to over 1,000 workers per week to support this critical service.”

A similar effort is underway in Houston. Local nonprofit MFE Food is Love has partnered with the Houston Food Bank to compensate laid-off or furloughed hospitality workers for serving meals to disadvantaged families.

Workforce Resources

Preserving Small Businesses

For small businesses struggling to stay afloat, the U.S. Small Business Administration and Small Business Development Centers (SBDCs) are stepping up to help.

“Texas SBDCs are being flooded with calls,” said Mary Peters, associate director of operations for the South-West Texas Border SBDC Network. “Many small businesses are looking for help with navigating financial options and with contingency planning. We stand ready to deliver business advising remotely and to act as a clearinghouse for continually updated small business resources.”

Community organizations such as LiftFund are offering assistance and loans to small businesses in need. Business and Community Lenders of Texas is providing technical assistance and lending services.

Small Business Resources

Community Response Continues

These are just a few examples of resources our communities are developing to address the impact of COVID-19. Leaders from every sector are continuing to look for ways to support vulnerable populations as the crisis evolves.

Author

Molly Hubbert Doyle

Community Development Advisor, Federal Reserve Bank of Dallas

The views expressed here are those of the author and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. The information provided does not constitute an endorsement of any organization or program.

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