Jessie Gray’s business plan always included building a stage. 

The troupes that frequent Gray’s improv studio, the Flying Pig on East Douglas Avenue, give performances to sold-out crowds on a flat surface. When Gray opened in 2019, she estimated that by 2022 she would have the funds for a stage and lights.

COVID changed that. The business closed for nearly a year.

“I just drained my savings to hold onto the business,” Gray said. “It was all personal money that went into that. I don’t really expect to recoup that. But because of that, I wasn’t able to generate the income to pay for a stage and lighting and sound this year.”

In March, she applied for a small-business grant from the city of Wichita for $27,360 to build the stage. In early April, she found out she didn’t get it.

Nearly 50% of the 81 applicants for the city’s $10 million in Workforce & Small Business/Entrepreneurial Development Grants were rejected because their organization was not eligible for the grant. Many, like Gray, were small-business owners. 

The reason? Businesses were ineligible for the grants. Only nonprofits, educational entities and public/private partnerships — a company paired with a not-for-profit — were eligible to receive funding. The City Council approved $5.6 million for workforce development grants and $792,511 for small business/entrepreneurship grants on April 12. Not one went to a small business.

But many businesses believed incorrectly that they could apply. The confusion was fueled, in part, by a staff member’s comment during a December City Council meeting that businesses were eligible for the grants.

City Manager Robert Layton said the city doesn’t have the in-house expertise to review the needs of small businesses. A committee of staff members from three city departments reviewed the grant applications.

“We wanted to make sure we would solicit proposals from nonprofit organizations or educational institutions that have that expertise, and then can establish the loan and grant programs based on need with defined criteria,” Layton said.

But that didn’t happen in the first round of applications.

The city opened a second round of grant applications on April 13 with $3.6 million available for workforce and small business/entrepreneurial grants. Businesses continue to be ineligible for the grants, but Layton said he has encouraged nonprofits interested in helping small businesses to apply.

Small businesses frustrated, confused by grant process

Gray said she applied for the grant after learning about it from a City Council meeting, where she heard small businesses were eligible. 

“I thought, oh boy, here’s my chance to do some things that were in my three-year plan that did not happen because of the pandemic,” Gray said. “And all of it was to develop my business so that I could have heartier shows and heartier class enrollment and all kinds of things.” 

She spent several days doing research for the grant application, including getting quotes from vendors for the cost of building the stage. 

Gray said she was left confused when the city told her the business wasn’t eligible for a grant.

“I’m disappointed,” Gray said. “And I’m a little confused.”

Gray is not alone. Of the 36 organizations that applied for the small-business grants and were ineligible, The Wichita Beacon confirmed through the Kansas secretary of state’s website that at least 26 were businesses — nearly 50% of the total small-business grant applications the city received. The Beacon spoke with several other small businesses who thought they were eligible and applied.  

“I really thought it was for small businesses,” said Emily Forsberg, who owns Free State Flora  and applied for a small-business grant. “So I apologized to them for wasting their time on it, but the way that it read to me was that it was for small businesses affected by the pandemic. I guess not.” 

Layton said that the city is going to change some communications around the small-business grants for the second round of funding.   

The city also told some nonprofits that they were ineligible organizations. Core Monitoring is a small business but also has a registered nonprofit arm called Core Cares. Tythan Miles, the president and CEO of both organizations, said he applied as a nonprofit but the city told him he was ineligible because he hadn’t submitted forms verifying the organization’s nonprofit status.

“After finding out that that was the reason for my ineligibility, I feel like it was another one of those biased Wichita processes,” Miles said. 

The Sunflower Land Trust is another nonprofit that applied for a small-business grant but was rejected. The organization didn’t include documents showing its nonprofit status in the grant application, Layton wrote in an email to The Beacon.

City pushes for small business grant applications in second round

The grant funds come from $72.4 million in American Rescue Plan Act (ARPA) dollars the city received from the federal government. These can be used broadly for pandemic recovery efforts, including direct assistance to small businesses, nonprofits and households.

Last summer, the city polled social media to see how it should use the funds. Support for small businesses came second, and workforce development came third. The city set aside $10 million for workforce development and small business/entrepreneurship grants and opened applications last December. The first priority, affordable housing, received $5 million in ARPA dollars earlier this month when the City Council created Wichita’s first affordable housing fund. 

On April 12, the city announced $792,511 in small-business and entrepreneurial development grants and $5.6 million in workforce development grants. One council member expressed concern that more dollars did not go toward small businesses.

“The small-business support really isn’t there right now,” council member Brandon Johnson said about the ARPA grants at the April 12 City Council meeting. 

Layton said he is hoping that multiple nonprofits or educational entities that can administer loans or grants to small businesses will apply in the next round of grant funding. 

Founders’ Grove, a nonprofit aimed at boosting minority entrepreneurship, said it would not be applying for round two because the city grant is processed as a reimbursement. This means the organization has to spend its own money on the program before the city reimburses it with the grant funds. This is in place to ensure accountability on how the money is spent, Layton said.   

“As an emerging nonprofit, we don’t have the funding capacity to participate in reimbursement-based grant awards at this time,” wrote Christina Long, owner of Create Campaign, the entity that owns Founders’ Grove.

Johnson said he wanted to bring together different nonprofit organizations focused on small businesses to discuss how they could partner to overcome these hurdles. But he worried that his involvement would be a conflict of interest.

Who received Wichita’s small-business grants?

The city allocated the $792,000 in small-business grants to two non-profit organizations, the Phillips Fundamental Learning Center and Groover Labs.

The learning center, an educational nonprofit that serves dyslexic children, is using $631,511 to pay for steel for a new building that would double the number of children they could serve. The cost of the steel increased due to COVID-related supply chain shortages. 

“We were shocked in February of 2020 to learn that our materials to build the building had gone up over $5 million,” said Jeanine Phillips, executive director of the Phillips Fundamental Learning Center. “It’s been a painful, painful journey.”

The new center will also train teachers on working with and teaching dyslexic children. The project was in the works years before COVID started, Phillips said.

The other grant recipient was Groover Labs, a nonprofit dedicated to entrepreneurship in Wichita. The organization received $161,000 to fund two full-time staff members and equipment for its Makers Lab. 

The goal of the Makers Lab is to help budding entrepreneurs or companies develop prototypes of physical products, said Curtis Gridley, executive director and co-founder of Groover Labs. The organization opened in January 2020 just ahead of the pandemic. Gridley said that stymied their ability to fully utilize Makers Lab. 

Gridley said that he hopes that expanding the staff will mean that more people will be able to use Makers Lab.