COVID-19 has severely damaged economies across the world, and urban areas in the United States are among the hardest-hit areas. While eventual recovery from the pandemic will help these economies mend to some extent, additional work will be necessary to restore them completely.

Recent data from Yelp shows that more than half of the American businesses closed due to the pandemic are now permanent. These closures leave large holes in community economies. Entrepreneurship remains the key hope for filling these holes and boosting overall business enough to revive urban economies across the United States.

Before the pandemic started, entrepreneurship had actually already been falling in the United States. The rate of new business openings was the lowest it had been in 40 years when COVID-19 started causing closures. Between February and June of 2020, more than a million business closed their doors.

Unfortunately, many of these businesses were owned by Black and Latinx entrepreneurs seeking ways to drive development in their communities. While focusing on supporting existing companies to prevent permanent closures should be a priority, legislators also need to focus on creating policies that will lead to new businesses.

The Importance of Entrepreneurship for Economic Recovery

Historically, new businesses drive almost all job growth within a community. Startups play an important role in replacing lost jobs. Moreover, communities with a larger number of businesses tend to have higher average incomes overall, as well as smaller income gaps between residents.

For these reasons, as well as the fact that current conditions are ideal for entrepreneurship, cities across the United States should shift their focus to supporting entrepreneurs as a means of recovery. Cities can play an important role in business creation by relaxing the barriers to entrepreneurship and mobilizing resources, not to mention creating opportunities for mentorship and other forms of support.

Many cities across the United States are already well-equipped to encourage entrepreneurship and have thriving entrepreneurial communities that are still engaged despite the pandemic. Government leaders and determined entrepreneurs are looking at the diversity and resilience of their communities and figuring out how to move forward despite the challenges.

The energy necessary for entrepreneurship exists in American cities, but these communities need support. Luckily, tools are available to help governments bolster entrepreneurial activity, such as the Field Guide for Policymakers, a free resource created by Right to Start, a campaign designed to unleash the entrepreneurial potential of urban Americans.

How Local Policymakers Can Encourage Entrepreneurship

This guide provides advice for all levels of government to support entrepreneurship in local communities. Overall, nine steps are recommended at the federal and state level and five for more local policymakers. The local steps start with removing barriers to starting a business, such as registration and licensing feeds. This red tape can prevent a lot of people from opening their own business.

Also, policymakers recommend providing financial support to younger companies that may be struggling to put down roots in an economy ravished by the pandemic. One way to do this is through catalyst grants that can help businesspeople start and restart businesses that are traditionally underserved by other sources of financing.

Another way that policymakers can support entrepreneurship in urban centers is by promoting local learning. Online entrepreneurial support organizations can be a source of education and training in local communities, but such initiatives need financial help to launch and continue offering important educational offerings.

Local libraries and similar resources can also serve as training centers for people interested in starting their own businesses. These centers can provide hands-on, even if socially-distanced, training, as well as expose individuals to a range of digital tools they can use to help them launch businesses.

Other Resources for Supporting Local Entrepreneurs

Several other resources are also available, including America’s New Business Plan, a white paper that explores policy barriers to entrepreneurship and offers a long-term strategy for restoring business in the United States. A nonprofit program known as 1 Million Cups already has chapters in more than 160 communities to help mobilize entrepreneurs in local communities.

Cities without this resource could investigate how to open a new chapter to support their communities. Also, the Kauffman Foundation holds an annual entrepreneurship summit. This year’s virtual event has resulted in a wide range of resources for policymakers who may want to create strategies within their communities to speed economic recovery.

The pandemic has challenged cities across the nation in a number of ways and thinking that these problems will disappear when COVID-19 has been conquered is not realistic. To recover economically, we need to invest in our communities now, especially by supporting entrepreneurs who can create new jobs and drive growth and development.

Supporting economic recovery in this way is just as important to supporting the health of all Americans and making an effective vaccine available. With a concerted effort, some communities may emerge from the pandemic even stronger than they were before it began.