Overcoming bias in small business relief in Colorado

Colorado Springs
Editor's note:

This case study is part of the Spotlight on Local Recovery Efforts series, a feature of the COVID-19 Metro Recovery Watch.



Nearly 11 months into the COVID-19 pandemic, the small businesses that are a crucial part of powering local economies are still extremely vulnerable after a delayed second federal relief package. With the smallest businesses being the least liquid and minority- and women-owned business enterprises (MWBEs) facing structural challenges that exacerbate COVID-19’s impact, it is clear that intentional investments are needed in the hardest-hit business communities to ensure an equitable recovery.

However, as the government distributes fiscal relief, systemic bias has reared its ugly head. The businesses with the greatest access to these relief programs tend to be those that already have the infrastructure, expertise, and connections to better withstand the COVID-19 disruption, with less well-resourced small businesses left more vulnerable to closure.

The Energize Colorado Gap Fund, powered by the nonprofit Energize Colorado, is tackling this challenge by offering up to $35,000 in financial assistance to small businesses with fewer than 25 full-time employees. Priority is given to businesses that are MWBEs, veteran-owned, in rural areas, in the tourism sector, and with limited access to capital. With small businesses accounting for 97% of the state’s enterprises, state legislators have partnered with Energize Colorado to provide $26 million in grant relief into the Gap Fund to assist the smallest and most vulnerable businesses.

Such sizeable, state-backed relief for these kinds of small businesses is rare but key to recovering the state’s economy. With an additional $5 million of support from several other funders to provide ultra-low-interest loans, the Energize Colorado Gap Fund has $36 million to distribute to qualified small businesses.

Solution execution

In March 2020, Colorado Governor Jared Polis formed a high-profile economic council of business leaders to advise on a COVID-19 economic recovery plan. One of the first recommendations from the council was the creation of Energize Colorado, an effort to help entrepreneurs, small businesses, and nonprofits throughout the state recover and grow. By April, Energize Colorado became its own independent, volunteer-driven, incorporated entity, and by September, it officially became a 501(c)(3) organization. That status allowed the organization to avoid the bureaucratic constraints of operating through a government agency and respond faster to the ongoing crisis.


Led and initially funded by private sector experts with a budget of less than $130,000 (which eventually grew to roughly $250,000), the new organization established channels of communication with several chambers and other nonprofit organizations in Colorado to best understand how different kinds of small businesses were struggling. From there, they built three phases of initiatives: 1) Stabilize to Recovery; 2) Innovate to Grow; and 3) Collaborate to Sustain. The current phase, Stabilize to Recovery, includes the Gap Fund, along with several other initiatives that are aiding small businesses through mentorship, mental health resources, and guidance for reopening. While the Gap Fund is an initiative of Energize Colorado, it was formed as its own LLC overseen by Energize Colorado’s board of directors and the Gap Fund Executive Committee. Kent Thiry, the former chairman and CEO of DaVita, was named chair of the Gap Fund.

The Energize Colorado Gap Fund partnered with a fund manager, the Colorado Housing and Finance Authority (CHFA), to hold the capital. CHFA then distributes funds to several community development financial institutions (CDFIs), regional loan funds (RLFs), and other nonprofit lenders across the state to deploy both grants and loans to small businesses who apply for assistance through one centralized application. These nonprofit lenders have strong relationships with underserved communities and are more accessible for business owners who do not have relationships with traditional banking institutions, giving Energize Colorado wider reach in providing aid to the small businesses that it aims to serve. 


Energize Colorado Gap Fund: Funding map

Energize Colorado put a lot of time into promoting the Gap Fund to potential applicants to ensure that as many qualified small business owners as possible were aware of the opportunity, with a strong focus on rural areas. They worked with several newspapers and smaller media outlets to get the word out, and through their partnerships with business organizations across the state, they were able to reach hundreds of thousands of businesses through phone and email to alert them of the opportunity to apply. The state of Colorado also used its resources to promote the Gap Fund.

Financial assistance from the Gap Fund is not distributed on a first-come, first-served basis; instead, the aid is distributed in rounds to give preference to the Fund’s prioritized businesses. However, because funding is limited, not all applicants are guaranteed assistance. Since the Gap Fund was announced on August 9, there have been two rounds of applications, with the first round (August 31 through September 15) deploying $7 million and the second round (October 9 through October 26) deploying $19 million.

The application is available online with translations in multiple languages, including English, Spanish, French, Arabic, Mandarin, Portuguese, Amharic, and Tigrinya. Energize Colorado’s website has an eligibility form tool for interested applicants, as well as an instructional video webinar that walks applicants through the application process. Applicants can also call a technical assistance hotline or interact with Energize Colorado via email if they have additional questions while applying.

Applicants must meet the following criteria to be eligible for financial assistance from the Gap Fund:

  1. Small businesses/enterprises: Applicants must be Colorado sole proprietors or registered small businesses, including LLCs, S-Corps, and other business types.
  2. Nonprofits: Colorado nonprofits whose mission and/or programs directly support economic development, small businesses, or tourism can apply.
  3. Fewer than 25 employees: Applicants must have fewer than 25 full-time equivalent (FTE) employees. An employer may use its off-season employee count.
  4. Impacted by COVID-19: Applicants must be able to show the economic hardship their business is facing due to the COVID-19 pandemic. The business’s story of hardship plus documents such as bank records, point of sale receipts, profit and loss statements, tax filings, and expense receipts can be used to show economic harm.

The website also makes it clear that preference is given to businesses that are women-owned, minority-owned, veteran-owned, or rural.

Business owners use one application to apply for up to $15,000 in grant money and up to $20,000 in low interest loans. Once the application cycle ends, it takes six to eight weeks for business owners to receive grant funds. Grant money is provided to aid businesses that are experiencing an increase in costs to operate during the pandemic or a decrease in revenue because of stay-at-home orders, voluntary closures for social distancing purposes, or decreased customer demand due to COVID-19. Loans with a maturation rate of 24 to 36 months are offered to assist businesses as well. During the first four months, the loans bear no interest and no payments are required, and for the remainder of the first year, the loans have a 1% interest rate. After the first year, the loans have a 1.5% interest rate. Businesses must pay the loans back in two to three years.

Solution cost and time frame of execution

The Energize Colorado Gap Fund currently has $36 million for small business relief: $26 million is public grant money and $10 million is for loans raised by Energize Colorado from both private and public contributors.

On June 23, Governor Polis signed SB20-222 into law, which allocated $20 million of federal CARES Act funding into the small business assistance grant program operated by Energize Colorado. The bill received bipartisan support in the state legislature, with a 33-0 vote in the Colorado Senate and a 65-0 vote in the Colorado House of Representatives.

On October 9, Governor Polis issued an executive order authorizing an addition $6 million of CARES Act funding to the Gap Fund grant program, bringing the total to $26 million. The Colorado Office of Economic Development & International Trade (OEDIT) oversees the grant program and was responsible for providing the Gap Fund with the CARES Act funding. Each business owner applying for financial assistance from the Gap Fund can receive up to $15,000 in grant money from this program.

To support the loan money available to small businesses, the Gap Fund has received contributions from several entities, including the Anchor Point Foundation, Gary Community Investments, the Gates Family Foundation, Pinnacol Assurance, the Colorado Health Foundation, the Colorado Housing and Finance Authority, the state of Colorado, the Thiry-O’Leary Foundation, and many others. This funding allows each business owner to apply for up to $20,000 in low interest loans, and Energize Colorado is continuing to fundraise to provide both more grants and loans for the state’s most vulnerable small businesses.


The Energize Colorado Gap Fund stands out as an impressive case of small business support during COVID-19. It is providing this support in an accessible way through nonprofit lenders to best serve the businesses that need the most support. Additionally, to make the Gap Fund grants available to business owners as soon as possible, Energize Colorado leveraged in-kind expertise from innovative private sector and community leaders to develop a creative and legitimate solution under tight time constraints. Most importantly, Energize Colorado’s efforts are not only addressing the crisis at hand with an immediate solution, but also providing long-term, sustainable capital and resources supported by other initiatives in the organization. The Gap Fund is expected to continue funding small businesses through sequential application rounds until further notice.

Through the first two rounds of applications, the Gap Fund received over 10,000 applications, and deployed over 2,000 grants that provided an average of $12,000, distributing a total of $26 million in 2020. Their promotion strategy proved to be effective considering that 99% of grant recipients fit into one or more of their priority groups, with 80% of recipients being women-owned entities, 37% being rural entities, 24% being Latino- or Hispanic-owned enterprises, and 16% being Black-owned enterprises.

Challenges and lessons learned

Using an equity lens for the application process has been a learning experience for Energize Colorado. For example, the Gap Fund initially did not have an online Spanish application, but once it realized that it was creating an additional hurdle for Spanish-speaking business owners by not doing so, the Gap Fund updated its application to be available in Spanish for interested applicants.

In addition, Energize Colorado did not initially realize how much technical support would be needed to assist its target applicants. Between the first two rounds, an estimated 1,200 interactions took place in which the Fund’s team had to provide support to business owners while applying. Their call center became a crucial resource to aid applicants and helped the Fund learn how to best improve the application process.

It is unsurprising that one of the biggest challenges for the Energize Colorado Gap Fund is not having enough money to meet the expressed needs of all applicants. The total request from all applicants was $240 million: $140 million in grants and $100 million in loans from a Fund that only had $36 million to distribute over a multiround sequence. As a result, Energize Colorado is continuing to raise money for the Fund to distribute.