A small D.C. daycare takes its first steps to recovery

COVID-19 dealt Sylvia Crews a double whammy. A year ago, her home-based day care center in southeast Washington, D.C., would be ringing with noise, with as many as nine children playing with her toy kitchen and racing around her garden. But as the pandemic spread and parents started keeping their children home, she was forced to close LTH Infants and Toddlers for six months.

Then, just as her business was starting to recover and despite heeding all precautions, she caught the coronavirus along with two of her staff. In January, she had to shut her doors for a second time. She has managed to keep her business afloat thanks in part to a U.S. Paycheck Protection Program (PPP) loan through Community Reinvestment Fund USA, or CRF, a national nonprofit that helps small businesses that lack access to capital from traditional financial institutions.

“When COVID hit, it shut everything down, people were more leery about bringing their children. It was a whole new ballgame out there,” says Crews, adding that two of her own six children also caught COVID-19. “We've had our legs cut out from under us. The cost of staying open is steep because of what you have to keep buying, what you’ve got to keep replacing — the personal protective equipment, the Lysol.”

41%

The pandemic has taken an enormous toll on Black entrepreneurs like Crews — from February to April 2020, 41% of Black-owned businesses closed their doors, compared to 17% of white-owned businesses.

That trend compounded systemic problems. Black business owners have historically struggled to thrive, locked out of the financial networks that would allow them to access capital and loans, and often victimized by predatory credit policies.

Limited data from the first round of PPP, which aimed to protect jobs by covering payroll expenses, indicated that loans reached a far lower percentage of Black-owned businesses than white-owned ones. 

That’s where CRF and other Community Development Financial Institutions (CDFIs) come in. These nonprofit financial services providers nurture local relationships in underserved communities to bring them new economic opportunities and help them reach their potential.

During the pandemic, CRF is playing a vital role in directing loans and financial advice to thousands of businesses owned by women, people of color and veterans. Through expanded support from the Mastercard Center for Inclusive Growth, CRF was able to speed access to credit for small businesses. The organization used a digital lending marketplace that matches businesses with CDFIs offering responsible loans.

To date, the Center’s work with CRF and CDFIs has delivered more than $8 million in grants that have enabled nearly $7 billion in affordable capital for underserved businesses across the U.S. This work with CRF is part of Mastercard’s $500 million commitment, made in the wake of nationwide protests over racial injustice, to help close the racial wealth and opportunity gap for Black communities across America.

Crews’ LTH is “a real classic case of what we're seeing day in and day out,” says Keith Rachey, chief impact officer and senior vice president of CRF. “These businesses have been devastated, they've been shuttered with absolutely no revenue, and if it were not for PPP loans, the employees would have been all let go.”

In partnership with community organizations,  CRF provides small business owners with digital tools and individual advisors who are critical in helping walk applicants through the complex PPP loan application process.

For Crews, working with an adviser helped smooth the PPP process. While many other childcare providers were forced to close permanently, she says the loan allowed her to hold on to three staff members.

Providing this kind of funding through the post-COVID recovery — especially for businesses sometimes overlooked by mainstream banks — is a top priority for CRF.

“People that have been left behind may not have the credit history or the past performance that a bank is looking for,” Rachey says. “We’ve got to look at the character of these individuals and then help them with the capital, but also with the business advisory support services. Once they’re on the ladder, mainstream finance can plug in well.”

Crews is considering applying for another PPP loan — the program is accepting applications through March 31 — to keep her business running until more children return and she can build back up to her maximum of nine babies and toddlers.

In the meantime, she is grappling with the additional costs of providing protective equipment and sterilizing the playrooms and toys to create a safe environment for both the children and staff.

“People want to go back to doing their normal life … who doesn’t? But we're not in normal times right now,” she says. “Knock on wood, I’m still in business.”